Javier Milei Promotes a Meme Coin to Millions
Elected in 2023 with promises of sweeping (and very much unorthodox) reform, Milei has dominated headlines for much of his term. In January, Milei achieved a five-year low in month-on-month inflation. In February, Milei traveled to the Conservative Political Action Conference in the United States, praising Trump and Elon Musk for their work in reducing the size/expenditure of the US government. Oh, and he also promoted a 4.5 billion dollar rug pull on X.
What is a Rug Pull?
Let’s start with the basics. A rug pull is a cryptocurrency scam characterized by a pump-and-dump and a removal of liquidity. Here’s how it works:
1. A coin is established. This process is quite easy (demands little-to-no technical knowledge) if done on a pre-existing blockchain. The meme coin promoted by Milei, $LIBRA, was created on the (pre-existing) Solana blockchain.
2. The coin is purchased by insiders before it is officially launched. This enables select individuals to own massive quantities of the coin at heavily discounted prices.
3. The coin is promoted. Crypto “meme coins” are especially popular among influencers, as they can reach many people quickly. In the past, celebrities including Jake Paul, Lindsey Lohan, and Kevin Hart have been used (either knowingly or otherwise) to generate publicity for coins. With respect to $LIBRA specifically, Argentine President Javier Milei tweeted that it would fund “small Argentine businesses and startups”. He proceeded to post a link to the coin’s website as well as its address (which enables others to purchase it).
4. Profit. Following Milei’s endorsement, the price of $LIBRA spiked from ~$0 to ~$5. Insiders sold accordingly: eight wallets (investor accounts) that received $LIBRA from the creator directly removed $99 million in liquidity (gained this quantity from the pool of invested funds). This, naturally, induced a plummet in the value of $LIBRA. In totality, 86% of all traders who purchased $LIBRA lost money, with losses totaling $251 million.
What Now?
Milei deleted his tweet within hours, likely recognizing the ramifications of his actions. He subsequently tweeted an apology, asserting that he was “not aware of the details of the project”. Nonetheless, the damage has been done. Tens of criminal complaints have been filed against Milei, and some opposition parties have called for his impeachment. His involvement is currently being investigated by a Federal Prosecutor, and, adamant regarding his innocence, he has personally invited the Justice Ministry’s Anti-Corruption Office to investigate him as well. In any case, “cryptogate” will have a lasting impact on Milei’s legacy as well as his broader de-regulation movement.
