Introduction

The LIBRA token is a cryptocurrency Argentine President Javier Milei announced on the Solana blockchain on February 15, 2025. Initially, LIBRA was described as a private project to boost Argentina’s economy by funding small and medium-sized enterprises and startups. With President Milei’s endorsement, the market value of LIBRA quickly soared to approximately $4.6 billion. However, within just three hours, its value plummeted to $150 million. This extreme price fluctuation raised concerns about the stability and legitimacy of the LIBRA token, leading to suspicions of fraudulent activities.

Incident Background

Argentine President Javier Milei caused significant turmoil in the cryptocurrency market with a tweet promoting the meme coin LIBRA. The token’s market capitalization skyrocketed to $4.6 billion within three hours before crashing by 97%, leading to allegations of insider trading and a “rug pull” scheme. This resulted in a federal investigation, a political crisis, and the risk of potential impeachment.

Incident Review

At 6:00 AM on February 15, the meme coin LIBRA was launched on the Solana blockchain. President Milei tweeted to promote LIBRA and its related project, “Viva La Libertad,” claiming that the initiative would boost Argentina’s economic growth by funding small businesses and local projects. He also included the token’s contract address. Shortly after, Milei’s Instagram account posted a screenshot of the same tweet, eliminating concerns about a hacked post and further intensifying market attention on the LIBRA token launch. KIP Protocol stated that it was the developer of the “Viva La Libertad” project.

Within the first hour of launch, over 44,000 wallet addresses purchased the token, causing LIBRA’s market capitalization to surge to $4.6 billion. However, around 11:00 AM, approximately three hours later, the token price crashed by 97%, wiping out nearly $4.4 billion in market value and dropping to $150 million. On-chain data revealed that insiders cashed out approximately $100 million.

Following the price collapse, Milei deleted his promotional tweet about LIBRA, claiming he was “unaware of the project details” and accusing the opposition of being “dirty rats.” Meanwhile, on-chain data indicated that eight wallets linked to the LIBRA team manipulated the token’s liquidity, collectively profiting over $107 million. Additionally, some early insider traders had positioned themselves before the president’s tweet, quickly buying in and selling at the peak, making at least $20.18 million in profits. These findings suggested that LIBRA’s dramatic price surge and crash were not accidental but rather a premeditated profit-taking scheme. As a result, a large number of investors who suffered losses directed their anger toward the project developer, KIP Protocol.

As the incident continued to escalate, in the early hours of February 16, KIP Protocol co-founder and CEO Julian responded to market concerns, attempting to clarify their role and fund flow in the LIBRA token incident. Julian emphasized that KIP Protocol was merely a facilitator in fund allocation for the LIBRA project, responsible for distributing funds to Argentine enterprises, rather than the issuer or market maker of the LIBRA token. He denied that KIP Protocol had profited from the LIBRA token and stated that the project’s funds remained traceable on-chain, asserting that they had not evaded responsibility.

Shortly after, KIP Protocol’s official account issued another statement, further clarifying that the actual issuer and market maker of the LIBRA token was Kelsier Ventures, naming its founder, Hayden Davis, as the responsible party. KIP Protocol claimed that the issuance and market-making of the LIBRA token were entirely handled by Kelsier Ventures, stressing that the wallets associated with profits had no ties to KIP Protocol or its co-founder Julian. KIP Protocol explained that they were only invited to participate after the token’s issuance, primarily to manage and oversee the selection of technology projects for funding and to provide technical infrastructure support for AI initiatives.

At approximately 8:00 AM on February 16, Kelsier Ventures’ official account released a video statement recorded by Hayden Davis. In the statement, Davis admitted to being an advisor to Argentine President Milei and acknowledged that the LIBRA project had spiraled out of control. He revealed that Milei’s team had promised Kelsier continued support during the LIBRA token issuance, but President Milei unilaterally deleted the promotional tweet without prior notice to Kelsier as a partner. This move left LIBRA token traders feeling betrayed and directly triggered the subsequent market panic sell-off, leading to the token’s dramatic price collapse.

Davis also defended the KIP team and its co-founder Julian, insisting that they had no misconduct in the incident. He speculated that President Milei’s team was attempting to shift blame onto KIP and Julian to evade their own responsibility. To compensate for the losses, Davis pledged to make every effort to recover all funds related to the LIBRA token, including profits and liquidity, and to reinject all recovered funds into the LIBRA token trading pairs within the next 48 hours. Additionally, Davis exposed a broader “potential scandal” in his statement, alleging that multiple projects—including Photon, Bullex, Meteora, Jupiter, and Moonshot—had profited from LIBRA’s price surge and crash.

Subsequent Clarifications

Moonshot later issued a clarification, stating that the LIBRA token had never undergone formal certification on its platform. The relevant feature was merely a tool allowing users to search for token information via contract queries and did not imply any endorsement of the project by the platform. This approach was essentially a misleading tactic designed to leverage the platform’s traffic and reputation to attract investors and create an illusion of credibility for the project.

During the token issuance process, the LIBRA team employed a deceptive strategy by taking advantage of Moonshot’s recently introduced token registration feature. By simply entering the LIBRA token’s contract address, they were able to display token information on the platform. This created the false impression that the token had passed the platform’s review, when in reality, it had never received any official certification. While the platform clearly marked the associated risks, these warnings were easily overlooked by eager investors.

Meteora also released a statement distancing itself from the LIBRA token project. In its statement, Meteora emphasized that its team had no involvement in the deployment, market-making, or launch timing of the LIBRA token. They explained that the LIBRA team had merely utilized Meteora’s permissionless platform, and that Meteora had never had any direct contact with the token or President Milei himself.

However, internet users quickly discovered that Meteora’s official account had previously commented under a photo of Davis and President Milei, writing: “What changing the world looks like.” This comment led many to suspect that Meteora was not as uninvolved as it claimed and may have, at the very least, initially viewed or even participated in the LIBRA project with a positive stance.

Reflections on the Incident

The Argentine LIBRA token incident was not just a financial farce fueled by a political endorsement—it was a microcosm of the broader disorder in the cryptocurrency market. This event exposed deep-rooted systemic risks in the industry and sparked profound discussions on the relationship between technology, power, and capital. However, while criticizing its negative impact, it is also essential to objectively assess the potential value of cryptocurrency technology for financial inclusion. If properly regulated, this neutral technological tool could offer financially fragile nations like Argentina a new path for development.

The Dangerous Marriage of Political Endorsements and Financial Speculation

President Milei’s tweet leveraged national credibility to endorse the LIBRA token, instantly igniting market frenzy. However, his lack of oversight (or deliberate vagueness) regarding project details directly led to a collapse of trust. When political figures use their personal influence to interfere in financial markets, they are essentially privatizing public power. The moment “presidential endorsement” becomes a marketing tool, the boundary between political rent-seeking and financial fraud is completely blurred.

The Illusion of Technological Neutrality

Blockchain-based exchanges (such as Meteora) and liquidity platforms (such as Jupiter) claim to uphold “technological neutrality”, yet their early involvement in the LIBRA incident raises questions about true impartiality and where platform responsibility should be defined. These platforms were aware that token listing rules could be exploited, yet they used “permissionless access” as an excuse to evade responsibility. “Technological neutrality” may have become a shield for avoiding accountability. Furthermore, Hayden Davis’ revelation of multiple projects that profited from LIBRA’s price fluctuations suggests the possibility of hidden interest alliances within the Solana ecosystem. Behind the facade of technological neutrality may lie covert collusion between capital and market influencers.

That said, it is undeniable that this openness also brings financial inclusion that traditional finance struggles to achieve. Any developer worldwide can deploy financial contracts at minimal cost, and small and medium-sized enterprises (SMEs) could, in theory, access international capital through tokenization—precisely the vision that LIBRA initially promised. Technology itself is neither good nor evil; the key lies in the ethical constraints of its users and the regulatory frameworks that govern it.

The “Jungle Law” in a Regulatory Vacuum

In this incident, insider traders cashed out over $100 million, yet no one has faced legal consequences, highlighting the lack of effective regulation in the cryptocurrency market. Project teams, exchanges, and investors are scattered across different countries, making it difficult for traditional financial regulatory frameworks to provide oversight. Although transaction records are publicly transparent, the real identities behind wallet addresses remain difficult to trace, resulting in minimal legal risks for bad actors. This environment provides fertile ground for “rug pull” scams and reinforces the notion that the cryptocurrency market, in the absence of global regulatory coordination, remains a “lawless frontier.”

Potential Advantages

Despite the LIBRA incident exposing the speculative and fraudulent risks within the cryptocurrency market, it is important not to overlook blockchain technology’s transformative potential in reshaping financial infrastructure. In countries like Argentina, where annual inflation rates exceed 100%, cryptocurrencies offer ordinary citizens a tool to hedge against fiat currency depreciation. With decentralized wallets, workers can receive cross-border remittances directly, bypassing traditional banking fees and delays.

Moreover, blockchain technology theoretically enables precise matching between global capital and local financial needs. Imagine a compliant tokenized fundraising platform: Argentine startups could issue products and related tokens to directly attract investors from other countries, while smart contracts could automatically distribute equity returns. If implemented within a regulated framework, such a model could break the geographic monopoly of traditional venture capital—a vision that LIBRA promised but failed to deliver. Additionally, blockchain’s transparent ledger, when paired with regulatory mechanisms, could significantly reduce corruption and fund misappropriation risks, standing in stark contrast to the opaque insider trading seen in the LIBRA incident.

Future Outlook

This incident once again confirms the highly speculative nature of meme coins, which lack fundamental value support and are easily manipulated by market sentiment and a small group of insiders. Retail investors are particularly vulnerable to schemes like “pump-and-dump” tactics. However, the deeper contradiction lies in the fact that cryptocurrencies, which aim to build a “trustless” financial system, still rely on centralized endorsements (such as a president’s backing) to gain market legitimacy. When technological idealism collides with human greed and political rent-seeking, the promise of financial democratization becomes an illusion. The true turning point for the future may lie in the establishment of a more robust and comprehensive system.

Establishing a Comprehensive Regulatory Framework

Countries could take inspiration from the Financial Action Task Force (FATF) model to establish a globally coordinated regulatory mechanism for cryptocurrencies. For example, a standardized disclosure framework could be implemented for politically endorsed tokens, requiring project teams to publicly disclose the real identities of team members, fund allocation plans, and liquidity lock-up rules.

Building Ethical Standards for Technology

Exchanges and liquidity platforms (such as Jupiter and Meteora) must be gatekeepers, implementing cooling-off periods for tokens endorsed by high-profile political figures to prevent instant speculative bubbles. Additionally, large sell-offs could trigger circuit breakers, halting extreme price swings. High-performance blockchains like Solana could introduce “recovery modules”, allowing the community to vote to freeze fraudulent token contracts as an emergency measure.

Developing an On-Chain Reputation System

A decentralized identity (DID) and credit scoring system could be created by leveraging zero-knowledge proofs. When a president promotes a token, their on-chain reputation profile could automatically display historical project success rates, past compliance records, and team legitimacy—helping investors identify potential “endorsement traps.”

Conclusion

The Argentine LIBRA token incident was a lose-lose spectacle that brutally demonstrated the devastating consequences when political power, technological hype, and financial speculation intertwine. Presidential endorsements, meticulously packaged projects, and the illusion of blockchain wealth creation ultimately became tools for capital exploitation, wiping out investors’ wealth instantly and severely damaging industry credibility. The industry can move towards a healthier, more rational, and sustainable ecosystem by confronting these issues head-on, engaging in deep reflection, and coordinating efforts across regulation, platform responsibility, and investor education.