Argentina's President Milei Faces Fraud Lawsuit Over $LIBRA Token 'Rug Pull'

Argentina's President Javier Milei is faced with a lawsuit initiated by Argentine lawyers over his promotion on social media platform X of LIBRA, a cryptocurrency that initially surged then crashed over the weekend.

Jonatan Baldiviezo, one of the lawyers who filed fraud charges against Milei, told The Associated Press that the lawsuit was filed in criminal court Sunday amid continuing concerns over the Argentine president's actions.

Milei Committed 'Fraud': Lawyer

Milei posted on X about LIBRA Friday, saying the crypto asset was aimed at "encouraging economic growth by funding small businesses and startups."

A few hours later, the post had been deleted, sending the coin's price crashing and resulting in millions lost to investors.

"Within this illicit association, the crime of fraud was committed, in which the president's actions were essential," Baldiviezo said of the incident. He noted how plaintiffs, Baldiviezo included, found there was an illicit association to commit "an indeterminate number of frauds."

Milei's Office Denies President's Direct Involvement

In a lengthy statement Saturday, the Argentine Office of the President (OPR) said Milei wasn't involved in the LIBRA token's development, contrary to speculations that he "rugged" investors.

The OPR admitted that Milei did hold a meeting with representatives of the KIP Protocol, which developed the crypto coin. The president was informed of the company's "intention to develop a project called 'Viva la Libertad' to finance private ventures in the Argentine Republic using blockchain technology," as per a Google translation of the statement.

Late last month, Milei again met with Hayden Mark Davis, whom the KIP Protocol representatives said would "provide the technological infrastructure" for the project. The OPR reiterated that Davis was in no way connected with the Argentine government.

The OPR also seemed to defend Milei's promotional post for the LIBRA coin, saying he posted the project's launch "just as he does daily with many entrepreneurs who want to launch a project in Argentina to create jobs and get investments."

It also reiterated that Milei did not have a role in "any stage of the development of the cryptocurrency" and decided to delete his post "to avoid any speculation and not give it further dissemination."

Finally, the OPR said Milei has established an Investigation Task Unit (UTI) to investigate the project and everyone involved with LIBRA's operation to determine "whether any of the companies or individuals linked to the KIP Protocol project committed a crime."

Davis Claps Back, Accuses Milei of Triggering $LIBRA Price Crash

Davis has since also released a statement, saying, "Milei and his team unexpectedly reversed their position" despite prior commitments to the project.

He said Milei's associates assured him that the Argentine president's "continued backing was guaranteed throughout the launch."

He went on to deny that there was any misconduct by the project's developers. "I can only assume that Milei's associates attempted to shift blame onto Julian [Peh, the KIP Network's founder and LIBRA token's primary sponsor] to shield themselves from accountability," Davis wrote.

Davis said that as custodian of the project's treasury funds, he is proposing to reinvest 100% of the funds under his control – some $100 million – back into LIBRA and burn all purchased supply within the next two days, unless a better alternative is determined.

$LIBRA Token was a 'Rug Pull'?

While Davis suggested that Milei's pullout from the project triggered the LIBRA coin's nosedive, blockchain data showed that the token's price was already on a significant downturn, seemingly following Lookonchain's report that the LIBRA team "cashed out $107M" from the project "by adding liquidity, removing liquidity and claiming fees."

Peh denied allegations the project was a rug pull -- a type of crypto scam wherein token developers promote a token only to abandon it after taking investors' money. "If it was a rug to start with, then we wouldn't have gotten the support we did," he said at a Saturday X space.

The 'Biggest Rug Pull' in Crypto History?

The crypto community was left in shock by the aftermath of the LIBRA launch. From a peak of over $4 billion in market cap, the coin now has some $200 million in market value.

Some wonder whether LIBRA is "the biggest rug pull in history," while Wu Blockchain revealed that LIBRA was developed by the same team that launched U.S. First Lady Melania Trump's MELANIA memecoin, raising concerns about the potential "implication" of U.S. President Donald Trump in the mess.

It remains to be seen how the lawsuit will turn out and whether the LIBRA coin will hold on and make a price reversal amid the chaotic turn of events.