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Argentina's President Mired in Crypto Scandal: The Calculated Launch and Political Manipulation Behind Libra's Collapse

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2025/12/16 18:30

Argentine President Milei promoted the Libra cryptocurrency on February 14, 2025, which crashed 85% within hours, causing investor losses exceeding $251 million
Congressional investigation reveals two crypto entrepreneurs, Mauricio Novelli and Manuel Terrones Godoy, played key roles in the token launch
Blockchain analysis shows suspicious fund transfers before the token launch, suggesting a calculated "pump and dump" scheme
Over 114,410 wallets suffered losses in this incident, contradicting Milei's claim of "fewer than 5 Argentines" being affected

Summary

In February 2025, Argentine President Javier Milei became embroiled in one of the country's largest financial scandals after promoting a cryptocurrency called Libra. Recent investigations reveal that two crypto entrepreneurs with close ties to Milei—Mauricio Novelli and Manuel Terrones Godoy—were not only present at the token launch but also briefed the president on the project's progress to prepare him for his endorsement. This scandal, dubbed "Cryptogate," exposes the dark side of the cryptocurrency market and how political figures can be exploited to manipulate markets. This article provides an in-depth analysis of the events and explores how investors should choose safer, more transparent cryptocurrency trading platforms.

The Libra Token Collapse: A Calculated Scam

Presidential Tweet Triggers Market Frenzy

At 7:01 PM Argentine time on February 14, 2025, President Milei posted a message on his social media accounts promoting the Libra cryptocurrency project. He claimed in his post that this was a "private economic initiative" aimed at stimulating Argentina's economic growth by investing in small businesses and startups.

According to the definition on Bitcoin.org, cryptocurrencies are supposed to be decentralized digital assets, but the Libra project's founders held 70% of the total supply—a level of centralization that fundamentally contradicts cryptocurrency principles. Just three minutes after Milei's tweet, Libra's value skyrocketed from $0.000001 to $5.20, achieving an astonishing gain in just 40 minutes.

However, the euphoria was short-lived. After reaching peak prices, the founding team suddenly sold their holdings, causing the price to plummet 85% within hours, ultimately falling to $0.99. According to data from CoinMarketCap, over 114,410 wallets suffered losses in this collapse, with total damages reaching $251 million.

Two Key Figures Emerge

The Argentine Congressional Investigation Committee's thorough inquiry revealed two key figures: 29-year-old crypto trader Mauricio Novelli and 36-year-old blockchain consultant Manuel Terrones Godoy. These two individuals were not only the organizers of the Tech Forum in October 2024 (which Milei attended as keynote speaker) but also maintained long-term business relationships with the president.

Investigations found that Novelli was the founder of a trading academy called N&W Professional Traders, where Milei served as an instructor from 2020 to 2023, teaching courses on "money, prices, and exchange rates." This close business connection paved the way for subsequent cryptocurrency promotions.

More shockingly, blockchain analysis expert Martín Romeo discovered multiple suspicious fund transfers between American entrepreneur Hayden Davis (the primary creator of the Libra project) and Novelli and Terrones Godoy around the time of Libra's launch. On January 30, 2025, 42 minutes after meeting with Milei, Davis transferred $1.015 million USDT to a Bitget account. Days later, $695,000 of those funds was transferred to Novelli's Binance wallet, while the remaining $320,000 was sent to a private financial institution linked to Novelli and Terrones Godoy.

Was the President Informed or Exploited? Congressional Investigation Reveals Shocking Truths

Milei's Defense and Questions

After the incident, Milei issued a statement five hours after deleting his Libra promotion tweet, claiming he was "unaware of the project's details" and comparing investors to "people gambling at a casino." In an interview with TN news channel, he stated: "The reality is if you go to the casino and lose money, I mean, what is the claim if you knew that it had those characteristics?"

However, the 200-page investigation report released by the Argentine Congressional Investigation Committee paints a starkly different picture. The report states that Milei provided "essential collaboration" for the Libra project and recommends that Congress evaluate whether the president's actions constitute "misconduct in office."

According to market analysis from CoinGecko, public endorsements of cryptocurrencies by political figures often trigger dramatic market volatility. Milei's sharing of Libra's contract address on his social media account with millions of followers effectively provided investors with a direct purchasing pathway. Without this 43-character contract number, investors would have been unable to locate this newly created token.

Pattern-Based Operations Raise Deeper Concerns

More disturbingly, the investigation committee found this was not an isolated incident. In December 2024, Milei had promoted another token called KIP Protocol, which was also linked to Novelli and Terrones Godoy.

Blockchain analysis shows that on the day of KIP's launch, Terrones Godoy converted KIP tokens to USDT and transferred them to Novelli, after which the token price experienced a similar "pump and dump" pattern.

Additionally, the investigation revealed that in 2022, Milei had promoted an NFT game called "Vulcano" created by Novelli, whose token $VULC subsequently crashed to zero and faced fraud allegations. This recurring pattern suggests there may be systematic exploitation of presidential authority to manipulate cryptocurrency markets.

Congressman Maximiliano Ferraro emphasized in an interview: "Based on the information requests we made to several crypto exchange platforms, we obtained data that not only directly refutes President Milei's statements but also begins to demonstrate the connection between the main players, both inside and outside the country."

How Cryptocurrency Investors Can Protect Themselves

Choosing Transparent Trading Platforms is Crucial

The Libra scandal serves as a wake-up call for cryptocurrency investors worldwide. In a market filled with speculation and manipulation, choosing a trustworthy, transparent trading platform has become more critical than ever.

This is precisely why more professional investors are choosing to trade BTC and other cryptocurrencies on MEXC. As one of the world's leading cryptocurrency exchanges, MEXC stands out in the market with several key advantages:

Industry's Lowest Trading Fees MEXC offers zero-fee trading services, meaning investors can maximize their returns without worrying about high trading costs eating into profits. In the Libra incident, some investors not only suffered losses from the token collapse but also from high fees on other platforms.

Most Extensive Trading Pair Selection MEXC boasts 1,500+ cryptocurrency trading pairs, providing investors with unprecedented diversification options. Whether you want to trade mainstream coins like BTC spot or explore emerging projects, MEXC meets your needs.

Superior Market Depth Deep markets mean even large trades won't significantly impact prices—crucial for professional traders. MEXC's liquidity pools ensure stable pricing and rapid execution.

Fastest Listing Speed MEXC is renowned for its rapid listing process, allowing investors to participate in promising new projects early. However, unlike unvetted tokens like Libra, MEXC conducts rigorous due diligence on all listed projects.

100% Reserve Guarantee Transparency is a core value at MEXC. The platform provides 100% proof of reserves, ensuring the security of user assets. Learn more about why choose MEXC.

Industry's Lowest Withdrawal Fees Unlike some platforms with exorbitant withdrawal fees, MEXC offers the market's most competitive withdrawal rates, allowing investors to freely manage their assets.

BTC Price Prediction and Long-Term Investment Strategy

For investors looking to avoid Libra-like traps, focusing on time-tested cryptocurrencies like Bitcoin is a wiser choice. According to MEXC's BTC price prediction analysis, Bitcoin, with its decentralized nature and widespread adoption, continues to be viewed as the "digital gold" of the cryptocurrency market.

Unlike tokens like Libra where a few individuals control most of the supply, Bitcoin's supply is predetermined, and no one can arbitrarily increase issuance or manipulate the market. This transparency and decentralization embody the original promise of cryptocurrency and what investors should pursue.

Legal Consequences and Political Impact

Multiple Legal Proceedings Underway

The Libra scandal has triggered widespread legal consequences. To date, Argentina's Supreme Court has received over 112 criminal complaints alleging fraud, money laundering, and abuse of power. A group led by Claudio Lozano, leader of the opposition Popular Unity party, has filed fraud charges against Milei.

Internationally, New York-based law firm Burwick Law is pursuing class action lawsuits on behalf of foreign investors who suffered significant losses, arguing that Milei's cryptocurrency promotion constituted deceptive practices. Additionally, the U.S. Department of Justice has received at least one complaint against Milei and the project developers.

Federal judges have ordered the freezing of Novelli's assets, and police have raided his residence. In May 2025, law enforcement released surveillance footage showing Novelli's mother, María Alicia Rafaele, and sister, María Pía Novelli, emptying safety deposit boxes at a bank, resulting in their assets also being frozen.

Long-Term Impact on Milei's Government

This scandal has been called Milei's presidency's "first big scandal" by The Economist. For a leader who campaigned on economic reform, allegations involving financial fraud are undoubtedly devastating.

The Workers' Left Front (FIT) has requested Milei's immediate appearance before the Chamber of Deputies to provide verbal reports, but these requests have been declined by Congress. While some opposition parties have called for impeachment, others including the Republican Proposal (PRO) party have stated that despite the seriousness of the incident, impeachment is not the solution and the matter should be handled through judicial processes.

The Congressional Investigation Committee has approved an investigation into Libra, requiring testimony from government officials including Milei and his sister, Presidential Chief of Staff Karina Milei. However, the investigation process faces significant resistance, highlighting the political sensitivity of this scandal.

Cryptocurrency Regulation Lessons from the Libra Incident

Risks of Regulatory Vacuum

The Libra incident highlights serious issues with insufficient cryptocurrency market regulation. In many countries, including Argentina, cryptocurrencies remain in a regulatory gray area, lacking clear legal frameworks to protect investors.

The congressional investigation report noted that the Milei government systematically bypassed technical bodies like the National Securities Commission (CNV) to directly promote unvetted token projects. This practice not only violates basic principles of financial regulation but also places ordinary investors at tremendous risk.

American cryptocurrency marketer Hayden Mark Davis has been involved in multiple memecoin "pump and dump" schemes, including the MELANIA token for the U.S. First Lady. In an interview with YouTuber Coffeezilla, Davis admitted he profited approximately $113 million from the Libra project, including $100 million from selling tokens and $13 million in fees.

Importance of Transparency and Accountability

While blockchain technology provides transaction transparency, its anonymity features also make tracking corruption and fraud difficult. As investigators noted, if Milei received bribes through cryptocurrency or profited from Libra, the anonymous nature of cryptocurrency makes it difficult to trace corruption back to him.

This is why choosing platforms like MEXC that prioritize transparency and compliance is so important. MEXC not only adheres to international Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations but also proactively cooperates with global regulators to ensure a safe, legal trading environment for users.

Investor Education: Key Signals for Identifying Cryptocurrency Scams

Watch for These Warning Signs

The Libra incident provides valuable lessons for investors. Here are key signals for identifying potential scams:

Overly Concentrated Token Distribution If the project team holds most of the token supply (like Libra's 70%), that's a major red flag. Legitimate projects typically have fairer distribution mechanisms.

Lack of Transparent Whitepaper and Roadmap Any legitimate cryptocurrency project should have a detailed whitepaper clearly explaining technical details, use cases, and long-term vision.

Reliance on Celebrity Endorsements While celebrity endorsements can increase project visibility, if a project primarily relies on celebrity promotion while lacking substance, investors should be cautious.

Promises of Unrealistic Returns Any project guaranteeing high returns or "get rich quick" should be viewed with suspicion. Cryptocurrency investment carries high risks, and no one can guarantee profits.

Lack of Exchange Vetting Tokens listed on mainstream, regulated exchanges (like MEXC) typically undergo more rigorous scrutiny. New tokens only available through decentralized exchanges (DEX) carry higher risks.

Conduct Proper Due Diligence

Before investing in any cryptocurrency, investors should:

Research the project team's background and reputation
Read and understand the whitepaper
Check tokenomics and distribution
Seek independent reviews in community forums
Verify information from multiple sources
Only invest amounts you can afford to lose

Remember, if something seems too good to be true, it probably is.

The Future of Argentina's Cryptocurrency Market

Calls for Regulatory Reform

The Libra scandal may become a catalyst for cryptocurrency regulatory reform in Argentina. Many experts are calling for stronger regulatory frameworks to protect investors and prevent similar incidents from recurring.

However, regulation must balance investor protection with innovation promotion. Overly strict regulations might stifle legitimate cryptocurrency projects, while overly lax environments give scammers opportunities.

Technology's Role in Fighting Fraud

Blockchain analytics company TRM Labs played a crucial role in investigating the Libra scandal. The company's tools can track every Libra transaction, identify anomalies like rapid transfers, large-volume trades, or wash trading, and link on-chain activity to known entities, identifying wallets associated with high-risk behavior.

This technological capability is crucial for combating cryptocurrency fraud. As regulators and law enforcement increasingly adopt these tools, the cryptocurrency market is expected to become more transparent and secure.

Rebuilding Investor Confidence

For Argentina's cryptocurrency community, rebuilding investor confidence will be a long-term process. The Libra incident not only caused direct economic losses but also damaged public trust in cryptocurrency as a legitimate investment tool.

However, this could also be a turning point. By learning lessons, strengthening regulation, and improving transparency, Argentina has an opportunity to build a healthier, more sustainable cryptocurrency ecosystem.

FAQ

What exactly happened with the Libra cryptocurrency collapse?

On February 14, 2025, Argentine President Milei promoted a cryptocurrency called Libra on social media. Within 40 minutes of his post, the token price surged from approximately $0.22 to $5.54, reaching a market cap of $4 billion. However, project founders held 70% of the token supply, and they dumped their holdings at peak prices, causing the token to crash 85% within hours to $0.99. Over 114,410 wallets lost approximately $251 million in this collapse. Investigations reveal this was a typical "rug pull" scam, and Milei's promotion provided crucial legitimacy and exposure for the fraud. The Congressional Investigation Committee found that two crypto entrepreneurs with close ties to Milei—Mauricio Novelli and Manuel Terrones Godoy—played key roles in the token launch and may have briefed Milei on the project beforehand.

How can I avoid cryptocurrency scams like Libra?

Avoiding cryptocurrency scams requires multiple precautionary measures. First, conduct thorough due diligence on any investment opportunity, including researching the project team, reading the whitepaper, and checking token distribution. Be wary of projects with highly concentrated token supplies (like Libra's 70% held by founders). Avoid investing solely based on celebrity or political figure recommendations—even presidential endorsements don't guarantee project legitimacy. Choose to trade on reputable, regulated exchanges like MEXC, which conduct strict reviews of listed projects. Don't invest in projects promising unrealistic high returns—remember "if it seems too good to be true, it probably is." Most importantly, only invest amounts you can afford to lose and always maintain rationality and caution.

Why is trading cryptocurrency on MEXC safer?

MEXC, as a leading global cryptocurrency exchange, sets industry standards for security and transparency. The platform provides 100% proof of reserves, ensuring user assets are fully protected—a stark contrast to many platforms lacking transparency. MEXC conducts strict due diligence and review processes for all listed projects, significantly reducing investors' exposure to fraudulent tokens. The platform boasts 1,500+ cryptocurrency trading pairs, providing diversification options while maintaining excellent market depth, ensuring even large trades execute quickly at stable prices. MEXC also offers the industry's lowest trading fees and withdrawal fees, allowing investors to maximize returns. More importantly, MEXC complies with international Anti-Money Laundering and Know Your Customer regulations, cooperating with global regulators to create a safe, legal trading environment for users. These features make MEXC the preferred platform for investors seeking to avoid Libra-style scams and engage in responsible cryptocurrency investment.

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Cryptocurrency investment carries high risks with significant price volatility, and investors may lose their entire principal investment. The Libra incident and related allegations described in this article are based on public reports and investigations, with final determinations of responsibility pending judicial decisions. Information about MEXC platform mentioned in this article is for illustrative purposes only and does not constitute a recommendation or endorsement of any specific platform. Before making any investment decisions, investors should conduct independent research, consider their own risk tolerance, and consult professional financial advisors when necessary. The author and publishing platform assume no responsibility for any direct or indirect losses arising from the use of this article's information. Past performance does not represent future results, and all investment decisions carry risks borne solely by the investor.

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