Milei Axes LIBRA Probe, Token Soars Then Crashes
Key Takeaways
- Argentina’s President Javier Milei has disbanded the investigative commission on the memecoin LIBRA.
- Following the dissolution, LIBRA’s price temporarily surged by 85%.
- The investigation is now continuing at the federal level – lawsuits are also underway in the United States.
- The allegations: fraud, market manipulation, and conflicts of interest.
Background: What is LIBRA?
LIBRA is a so-called memecoin – a cryptocurrency often driven by internet hype and lacking genuine technological innovation. LIBRA gained popularity in Argentina in early 2025, largely due to public support from President Milei on the platform X (formerly Twitter). Within days, its market capitalization surpassed 4.5 billion US dollars.
However, the hype was short-lived. The developers, including founder Hayden Davis, allegedly withdrew from the project with millions in funds. The suspicion: organized fraud. Affected investors estimate their losses at approximately 250 million US dollars.
Establishment and Dissolution of the Investigative Unit
In response to the allegations, the Argentine government established the so-called UTI (Unidad de Tarea de Investigación), a task force to investigate the LIBRA events. It was led by María Florencia Zicavo. However, critics pointed out from the beginning the UTI’s close ties to the government – real independence was said to be lacking.
On May 21, 2025, President Milei ended the work of the UTI via Decree 332/2025. Officially, it was stated that the commission’s objectives had been achieved. However, no final report was published. This lack of transparency sparked renewed criticism – and left room for speculation about political interference.
Market Reaction: Price Surge Despite Scandal
Immediately following the dissolution of the UTI, LIBRA’s price experienced a sharp increase. Within one hour, the price rose from 0.022 US dollars to over 0.07 US dollars – an 85% gain. It later stabilized at around 0.04 US dollars. The Relative Strength Index (RSI) briefly reached 72, indicating an overbought market condition.
This price spike suggests a purely speculative reaction – driven by the news rather than fundamentals. Such movements are typical for memecoins, where emotions and headlines often have more impact than actual developments.
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Legal Consequences and International Investigations
The dissolution of the UTI does not mark the end of the case – quite the opposite. The investigation has been handed over to federal authorities. Additionally, a parliamentary committee in Argentina is preparing its own inquiry.
At the same time, a class-action lawsuit is underway in the United States against President Milei. The allegation: negligent promotion and misleading representation of LIBRA. Plaintiffs accuse him of contributing to the project’s legitimacy through his public endorsement – with significant financial consequences for investors.
Our Assessment
The dissolution of the UTI raises more questions than it answers. While the LIBRA project has delivered short-term price gains, the legal risks remain high. For investors, this means caution is advised. The case illustrates how political interference and lack of regulation in cryptocurrencies can lead to substantial losses.
If you’re considering investing in memecoins, don’t be swayed by hype or celebrity endorsements. Always research a project’s background – and be aware that quick profits often come with high risks.
Sources
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