Argentina's Milei faces fraud probe after boosting a crypto coin that crashed hours after its launch

Then presidential hopeful Javier Milei looks on during a press conference in Buenos Aires, Argentina, Oct. 11, 2023. (AP Photo/Natacha Pisarenko, File)

BUENOS AIRES, Argentina — A judge in Argentina was selected Monday to investigate allegations of fraud against President Javier Milei for his brief promotion of a cryptocurrency whose value collapsed within hours of its launch last week. Milei distanced himself from the scandal and said he acted in good faith.

Milei and his office denied involvement with creators of the $LIBRA cryptocurrency, saying he initially drew attention to it Friday as an entrepreneurial project that might benefit Argentina but learned more about it later and then withdrew his support.

Lawyers in Argentina filed fraud complaints against the libertarian President on Sunday. The case was assigned Monday to Judge María Servini, head of Federal Court No. 1 in Buenos Aires. She doesn’t have a deadline to finish investigating the allegations.

In a tweet Friday evening that coincided with the launch of the $LIBRA crypto coin, Milei said that it was aimed at “encouraging economic growth by funding small businesses and startups.”

It enjoyed a brief spike in value above $4 billion in market capitalization, although its value began to decline amid comments of critics that it could be a scam. Milei deleted the post a few hours later as the value of the cryptocurrency was collapsing in a downturn that caused millions of dollars in losses to many of its new investors.

The coin, developed by KIP Protocol and Hayden Davis, could be obtained by accessing a link that directed users to a website called vivalalibertadproject.com, referring to the well-known phrase “Viva la libertad!” that Milei uses to close speeches and messages on his social media.

The president’s office said in a statement that Milei was not involved in any stage of the cryptocurrency’s development and decided to remove his post to avoid speculation and limit further exposure, following the public reaction to the project’s launch.

“The president shared a post on his personal accounts announcing the launch of KIP Protocol’s project, as he does daily with many entrepreneurs who wish to launch projects in Argentina to create jobs and attract investments,” the president’s office said.

After deleting the post, Milei said on X he was unaware of the details of the cryptocurrency, and accused his political opponents of trying to exploit the episode.

“I have nothing to hide and I have no problem coming forward and showing my face,” Milei said Monday in an interview with the Todo Noticias channel. “Those who entered there voluntarily knew what they were getting into,” he added. ”As volatility traders, they understood the risks involved.”

His office said in the statement that the country’s Anti-Corruption Office, which operates under the executive branch, would investigate the case.

Jonatan Baldiviezo, a lawyer and one of the plaintiffs, said Sunday that the plaintiffs allege that Milei’s actions were part of an illicit association to commit “an indeterminate number of frauds” in the episode.

“Within this illicit association, the crime of fraud was committed, in which the president’s actions were essential,” he said.