How Argentina’s President May Have Accidentally Frauded His Entire Country With a Crypto Scheme
By Ali Ghazaly
Contributor
In 2023, Javier Milei shocked the world by winning the 2023 Argentine presidential elections. As a self-identifying anarcho-capitalist, he ran on a program of fixing the free falling Argentinian economy with radical methods. Part of his radical agenda was to introduce cryptocurrency as an alternative to worthless fiat currency, which has been steadily going down in value since the financial crash of 2008. What no one expected was for his whole operation to backfire, with $100 million dollars from hardworking Argentinians being stolen from them. How did this come to be?
Argentina’s Fragile Democracy
Argentinians have not had the opportunity to experience genuine democracy for a long time now. In 1930, Argentina’s democratic system was suspended in favour of military dictatorship and military guided democracy. The most important man of Argentinian politics became Juan Peron, with parties to this day still upholding his values and ideology. Free and fair elections would only be reestablished in 1983, following their defeat in the Falklands war.
The Ancap Victory Secured
With the economy in free fall ever since the stock market crash of 2008, the door was wide open for radical ideologies and parties to surge in the limelight. In the 2023 elections, the main competition was between the Peronist party, and a new electoral alliance of ultra right-wing conservatives, with deregulation of the economy their main selling point. In the second round of voting, this new party won, enshrining their leader, Javier Milei, on the Argentinian throne.
New Economic Policy
As Milei secured his grip on power, his promised programme was starting to come to fruition: reduction of inflation, budget surpluses, investments in the economy, surprisingly, his policies seemed to have an effect, unexpected for a party who political analysts dubbed fringe, reactionary, and a fad. Unfortunately, with these newfound austerity measures, the biggest losers have been the poor, and unemployment has increased. Though, then again, according to economic experts around the globe, these are just growing pains, as the economy is expected to bounce back, enriching all citizens once more.
Why Crypto?
The reasons for the Argentinian president launching this crypto scheme, christened $LIBRA coin, were, according to his post on X (formerly Twitter), to “encourage the growth of the Argentine economy”. Of course having a form of currency in the hands of private individuals has never caused any issues (looking at you, federal reserve). Crypto was an interesting choice, as it has the possibility of overtaking fiat currency (the money we currently use) as the new standard for transactions. Since it’s super decentralized, no one government or individual can take it over or hijack it, at least, in theory. With the launch of this new coin, what could go wrong?
Everything Goes Wrong
It turns out, everything could go wrong. A few hours after posting his tweet, the president deleted it, realizing something fishy was going on. The coin fell victim to what is called a “pump and dump” scheme. Where, to briefly summarize, a bunch of well connected individuals buy the coin before it officially launches, or right as it officially launches, at a poultry price, then, as the coin shoots up in value, they quickly sell off the coin. With the coin now reflooding the market, it loses all of its value once more. Obviously this type of insider trading is illegal, but since lawmakers are slow to come up with regulations for cryptocurrencies, most dumpers get away with it, earning the ire of internet users and not necessarily the law. $LIBRA earned the moniker of a “memecoin”, an insult given to cryptocurrencies that fail to deliver and perceived as scams.
Disastrous Consequences
Following the pump and dump, it is estimated that around $100 million was made by insiders. Despite other similar “memecoins” having relative success, like TRUMPcoin, genuine concerns of the viability of such crypto schemes should any other country attempt a similar stunt will be raised following this disaster. And it’s not just on the economic front that Milei has been struck, but some analysts are also suggesting that the political opposition might use this opportunity to trash on his name, or even impeach him. His response? Call his opponents rats for exploiting the situation.
What Now?
With this disaster now nearly concluded, what are some key takeaways? Well, for one, don’t trust private crypto companies with a track record of engaging in pump and dump schemes to launch a coin for your countrymen. As for Milei’s political career, he will probably survive. His fiscal policies have earned him a good deal of praise, and as long as he can prove that he had little to no involvement in the scheme, he should be safe from any legal troubles as well. As for the future of crypto, it is best to stick with trusted coins like Etheryum and Bitcoin, and not memecoins like $LIBRA or pepethefrog or chudcoin or any other abomination that people on the internet come up with to scam people. Please don’t fall for their tricks. You know what they say to those who get fooled twice…