Milei Denies Wrongdoing in His First Defense of Crypto Debacleン
Milei Denies Wrongdoing in His First Defense of Crypto Debacle
(Bloomberg) -- President Javier Milei spoke out for the first time about a cryptocurrency scandal that’s dented his reputation in Argentina, triggering lawsuits and even calls for his impeachment.
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Milei confirmed he met with the people who proposed and launched a so-called memecoin called Libra. He said he didn’t post about it on social media with the intent of persuading people to buy it, but rather to raise awareness about an effort to support Argentine businesses using crypto.
“I’m not an expert. My specialty is economic growth, with and without money,” Milei said Monday night in an interview with local television station Todo Noticias. “As a guy who’s a super technology enthusiast seeing the possibility of a tool to finance entrepreneurs’ projects, I spread the word.”
Milei’s problems started Friday night when he directed his millions of social media followers to the Libra token, sending its value soaring. Within hours, the coin’s value more than quadrupled, making the total outstanding amount worth $4 billion. It then crashed, handing speculators large losses.
The Argentine government has launched an internal investigation and Milei’s opponents are seizing on the worst crisis he’s faced since taking power more than a year ago. The president conceded that his openness to meeting with anyone offering up solutions to his country’s perennial economic woes may need to change.
“The most important lesson is that I can’t keep being the same Javier Milei as always,” he said. “Sadly I have to put up more filters so that it’s not as easy to reach me.”
While Argentines demanded answers, the presidential palace initially stayed silent. Economy Minister Luis Caputo was the first member of cabinet to speak publicly earlier Monday evening, saying the incident was an unforced error about a niche topic and that Milei had no ill intentions and had committed no crimes.
“Cryptocurrencies are a tiny, infinitesimal world. It’s a world of specialists that’s very hard to understand,” Caputo said. “I don’t understand crypto either, and it’s been explained to me 800,000 times.”
Milei’s economy minister tried to reassure the public that the incident would have no fallout for markets and said that no overseas investors had texted him to inquire about the matter. Despite having spent time Monday in the presidential palace, Caputo said he hadn’t discussed the issue with the president, or even seen him.
US bond and equities markets were closed Monday. Still, investors in Buenos Aires dumped shares in some of the country’s largest local companies. The benchmark S&P Merval Index saw its biggest one-day drop since July, falling some 5.6% on Monday.
On social media, the government tried to shift attention to January’s budget surplus. Milei hosted Montana Republican Senator Steve Daines on Monday, and took a photo in his office with a chainsaw to represent his efforts to cut government spending. On X, he reshared a post from US President Donald Trump with a Milei quote and a photo.
While the political and market repercussions remain unclear, the episode has been embarrassing for the libertarian, who has thus far enjoyed popular support even as he slashed government spending. His main victory has been getting inflation down to its lowest level in nearly five years last month.
Some Milei allies told local media Monday that the president had been scammed by those who launched the coin, and said he hadn’t been familiar with the details. Meanwhile, Hayden Davis, the chief executive officer of Kelsier Ventures, which helped launch the coin, said he was still seeking an explanation from the government.
Speaking in a streamed interview earlier Monday with Barstool Sports founder Dave Portnoy, Davis said the launch had been orchestrated alongside Milei and members of his team, whom he didn’t name. Portnoy, who himself suffered steep losses and dubbed the token “the biggest rug pull of all time,” said he had been refunded for his losses by Davis.
‘Not Corrupt’
Davis said he believed it wasn’t Milei himself, but people close to him, who had been responsible for the debacle. He didn’t name any of them, however, and claimed to fear for his life.
“I firmly believe he’s not corrupt,” he added, in the president’s defense. “I don’t think Milei even fully knows what’s going on.”
According to Max Burwick, managing partner at Burwick Law in New York, hundreds of clients lost large sums due to Libra’s price swings. The firm is “helping them explore potential avenues for financial recovery,” he said, in reply to written questions.
Moyano & Asociados, a local law firm, said it filed a complaint with the US Securities and Exchange Commission.
An Argentine judge was assigned to investigate more than 100 legal cases that were filed against Milei since the incident. Opposition leaders called for an impeachment trial that’s unlikely to prosper since it would require a two-thirds majority in Congress.
Milei, meanwhile, still plans to fly to Washington this Wednesday night in hopes of meeting Trump. The Argentine leader wants to secure the US president’s support for his country to receive more money from the International Monetary Fund in a new program that’s still under negotiation, as well as possible exemptions from Trump’s tariffs.
--With assistance from Kevin Simauchi and Matthew Bristow.
