$Libra cryptocurrency scandal lands Javier Milei in the worst crisis of his presidency

Javier Milei’s aura has lost its shine. A post on X, the platform where the Argentine president wages his “cultural battle” and feels most comfortable, was enough to spark a political crisis, the worst in 14 months of the populist’s far-right government. Last Friday, Milei recommended investing in $Libra, a new cryptocurrency that he presented as part of a project to finance small entrepreneurs. $Libra shot up in minutes to reach a global value of $4 billion. While everything appeared like great business, the scam was consummated. Those few who had bought seconds before Milei’s post at a bargain price fled with their profits and left a trail of victims. Milei then deleted his message, arguing that he had not “informed” himself enough about the matter. Pandora’s box was then opened.

At best, Milei had allowed himself to be convinced by unknown businessmen of the alleged benefits of $Libra and paved the way for them to pull off a huge deal using his name. The crisis followed: requests for impeachment in Congress and legal proceedings now corner the president. On Monday, Milei finally tried to fashion a response in a recorded interview with the news network TN. Those who bought $Libra did so at their own risk, because the crypto market, he said, “is like a casino.” His responsibility was limited to that of an ordinary citizen who, “in good faith,” had promoted what he considered a good idea. The government was satisfied with the result. Toward the end of the day, the presidential spokesman, Manuel Adorni, posted a message on his social networks wishing “everyone the best of nights ahead.” He signed off the message with his usual “The End,” a personal seal that puts a cloak of irony on all his posts. Peace did not last long for Adorni.

The leak of an unbroadcast part of the interview stirred everything up. The footage shows Santiago Caputo, the most powerful man in the government, interrupting the journalist, who insists on blaming Milei for being “a citizen” and “the president.” “Yes, I understand, I realized… It could cause a legal problem,” the journalist concedes. Then he looks at the ceiling and rephrases the question, which was the one that was finally aired.

Caputo’s interruption was strategic. Milei faces an investigation for alleged fraud and “criminal conspiracy.” A law firm filed a similar complaint in the United States against Milei and the companies behind the $Libra operation: Kip Protocol, owned by Julián Peh; Kelsier Ventures, owned by American Hayden Mark Davis; and Argentine Mauricio Novelli, a promoter of investment courses which Milei taught as professor during his time as a congressman in 2021. These companies, according to the accusation filed by the law firm Moyano & Associates, are not registered with the U.S. Securities and Exchange Commission (SEC) and are not authorized to act as brokers representing investors in Argentina. The lawyers also warn that the $Libra launch operation could have violated several U.S. laws.

The interview with Milei was a key piece of a possible legal defense strategy, hence the zeal to edit it. If Milei admitted that on his personal account on X, where he has 3.8 million followers, he also posts in his capacity as president of Argentina, his legal situation threatened to become complicated. On Tuesday, high-ranking government officials tried to perform damage control, evidence that there is concern in the Casa Rosada. Cabinet chief Guillermo Francos said it is “usual” that “there are corrections in the recorded notes.” Minister of Justice Mariano Cúneo Libarona said that “the recorded notes are for that; to avoid some blunder.” Adorni attempted, imperturbable as always, a more elaborate justification: “Santiago Caputo cut the interview because he has the defect of excellence and he noticed that this could cause confusion to part of the audience. In fact, he finished the note and the president told him: ‘Santiago, unnecessary.’” Meanwhile, the army of trolls defending the president on social media have gathered around Milei’s discourse about “honesty,” the opposite of “the idiot”, as they consider former president Cristina Fernández de Kirchner.

The $Libra scandal is growing and its political consequences are difficult to predict. The impeachment motion has little chance of success, because the Kirchnerist opposition will hardly get the two-thirds of the votes it needs to push it through. But the crisis has opened deep fissures in the heart of the government and the heterogeneous block that its political allies make up. Inside the Casa Rosada, it was surprising that Adorni targeted Caputo, the man who, along with Milei and his sister Karina, forms what is known as the “iron triangle” of power. At the end of the interview, the spokesman said, Milei told his star advisor that his interruption had been unnecessary, a revelation that only a few months ago would have been kept within four walls.

Among the government’s allies, former president Mauricio Macri (2015-2019) gave voice to the unrest generated by the $Libra crisis. “We have seen a careless and poorly surrounded president. I have a relationship of affection [with Milei], but he has to surround himself better. He is in the middle of a situation that has been a scam and deserves a serious investigation,” said Macri, before hitting where he knows it hurts the most: “I would rather know why it happened before the SEC and the FBI come to tell us what happened.” Macri and Milei have been entangled for months in a love-hate relationship. The president is fighting to get Pro, Macri’s party, to join his La Libertad Avanza formation. The former president sees behind this an attempt to force his disappearance via a poisoned alliance in the legislative elections next October; and he intends to sell dearly the support that his deputies give Milei in Congress to advance the laws tabled by the Casa Rosada. Until Monday, the game was clearly in Milei’s favor.

It is possible that, in any case, neither the judicial nor the political fronts should worry Milei the most. The president has forged among his followers an image of a financial and economic genius who today is at a crossroads where all the exit paths are bad. If Milei has not committed any act of corruption with $Libra, as he claims, he will have to admit sooner or later that he was assaulted in his naivety by a group of small-time crooks. His promise that he would build “a wall” to contain the wave of people who try to sell him more or less serious ideas goes in this direction. On Friday, the king of the “forces of heaven,” destined to save the world, was made to appear naked.

Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition