The collapse of the libra token triggered a number of lawsuits and calls for his impeachment. While Milei claimed he merely ”spread the word” about the token without financial involvement, critics still accuse him of market manipulation. The scandal also led to legal complaints in both Argentina and the US. Meanwhile, Solana’s ecosystem is facing bearish sentiment as meme coin collapses, including LIBRA’s, have triggered some serious concerns over insider selling and retail losses. This led many traders to take short positions on SOL.
Milei Distances Himself from Libra Token Controversy
Argentina’s President Javier Milei denied allegations that he promoted the controversial Libra token, which collapsed in value after a brief surge. This triggered multiple fraud lawsuits and calls for his impeachment. In a Feb. 17 interview with Todo Noticias, Milei stated that he did not endorse the token but merely ”spread the word.” This was his first public response to what local media have labeled ”Libragate.”
Javier Milei’s interview
The Libertad project’s native Solana token, LIBRA, experienced a meteoric rise to a $4.56 billion market cap on Feb. 14, after a post by Milei on X. However, after he deleted the post, the token plunged by 94%, which led to accusations of a pump-and-dump scheme. Despite these claims, Milei insisted that he had “nothing to hide” and acted in “good faith.” He acknowledged that the incident was a learning experience, and believes there is a need to “start setting filters” on what is deemed appropriate conduct.
Milei argued that any problems arising from the token’s launch should be limited to those who are directly involved. When it came to actually addressing the concerns about the 44,000 investors who may have suffered losses, he downplayed the numbers by claiming that the majority were bots. He estimated that only around 5,000 individuals were actually involved. He also stated that the likelihood of Argentine investors being affected was “very, very remote.”
Despite the controversy, María Fernanda Juppet, CEO of Argentine crypto exchange CryptoMKT, believes that the situation will not impact cryptocurrency adoption in the country. She pointed out that most crypto transactions in Argentina are conducted by using stablecoins tied to the US dollar, and suggested that the issue is more of a political debate than a rejection of digital assets or financial innovation.
Initially, Milei was supportive of the idea behind the LIBRA token as a tool to boost Argentina’s economy, which has struggled because of long-term state mismanagement. However, he claimed he was unaware of the specifics of the project when he made his post and denied having any financial connection to the company behind the token. He did, however, confirm that he met with representatives of KIP Protocol, a Web3 company specializing in AI payment infrastructure, on Oct. 19 in Argentina. The company reportedly informed him about a blockchain initiative but did not discuss a token launch.
KIP Protocol has since distanced itself from the controversy, and denied any role in creating the LIBRA token or acting as a market maker. In a Feb. 17 statement on X, the company clarified that it was merely hired as a tech consultant to help distribute project funds to Argentine businesses.
CEO Julian Peh, who met Milei in October, stated that he was unaware of the token launch timeline. Meanwhile, Jupiter Exchange reported that discussions about LIBRA were circulating among meme coin traders up to two weeks before its dramatic rise and fall but found no evidence of insider trading among its team members.
Milei Faces US Investigation Over LIBRA
An Argentine law firm also recently filed a criminal complaint with the United States Department of Justice and the Federal Bureau of Investigation (FBI). The complaint called for an investigation into the people behind the collapse of the LIBRA token, including the potential involvement of President Javier Milei.
According to Clarin, the complaint that was submitted on Feb. 17 adds another layer to the growing legal pressure surrounding the scandal. Meanwhile, Civic Coalition ARI filed a separate criminal complaint with Argentina’s Ministry of Justice, and accused Milei of bribery and fraud.
The Argentine government has tried to distance Milei from the incident by arguing that he was misled by those behind LIBRA and was unaware of its financial structure. However, pressure continues to mount, with opposition figures pushing for impeachment. The country’s fintech chamber also acknowledged concerns that LIBRA may have been a rug pull, which only served to intensify scrutiny. Opposition lawmaker Leandro Santoro has been very vocal in his criticism, and stated that the scandal embarrassed Argentina on an international level and warrants impeachment proceedings against the president.
The incident also attracted the attention of the United States. President Donald Trump posted on Truth Social about Milei by sharing an image of him alongside the statement, “If printing money would end poverty, printing diplomas would end stupidity.” Milei responded by resharing screenshots of Trump’s post on X.
In an interview with Coffeezilla, LIBRA founder Hayden Davis defended the token’s collapse as a business failure rather than a scam, and dismissed criticism as complaints from those who were not included in the opportunity. He argued that those who benefited from these kinds of deals rarely voice their dissatisfaction. Despite these claims, the legal and political fallout from the LIBRA debacle continues to escalate.
Meme Coin Fallout Sparks Bearish Bets on SOL
Traders are increasingly betting on a decline in Solana’s SOL coin as sentiment weakens because of the mounting meme coin controversies on the network. Data from Coinalyze shows that the ratio of long to short positions on SOL futures dropped from 4 to 2.5 on Feb. 17. This signals a bearish shift. Influencer Tyler Durden noticed that Binance’s short-to-long ratio surged to 4-to-1, which also reflects growing pessimism.
Meme coins like Bonk and Dogwifhat previously attracted billions to Solana’s ecosystem, with both reaching over $4 billion in market cap before retracing. Meme coin speculation also drove a 213% increase in Solana’s application revenues in Q4 of 2024, according to Messari.
However, insider selling and massive retail losses dampened this enthusiasm. The recent collapse of the LIBRA token further fueled these concerns from investors. Additionally, traders have lost approximately $2 billion across 800,000 wallets on Trump’s official meme coin, which saw its fully diluted valuation drop from over $70 billion to $17 billion.
Despite the turmoil, Solana still generates more revenue than Ethereum, which is the largest layer-1 network by total value locked, according to DefiLlama. However, with sentiment deteriorating and traders increasingly taking short positions, Solana faces growing uncertainty in the wake of ongoing meme coin scandals.
This article was originally Posted on Coinpaper.com
