$LIBRA: The Ugly Side Of Crypto That Saw Traders Lose $251 Million

Hopes were high for the LIBRA token project right after the digital coin's launch Friday, especially after Argentine President Javier Milei promoted the memecoin on X, but the thrill soon turned into chills as the token plunged as fast as it surged to a staggering $4.5 billion market cap within a few hours.

The LIBRA project was supposed to help boost Argentina's economy, at least according to Milei, but in just hours, he pulled out support, causing the token to plunge dramatically to a market cap of around $200 million within two days.

Nansen Takes a Deeper Look Into the $LIBRA Scandal

In a new report, blockchain analytics firm Nansen revealed the details on traders who won and lost in the LIBRA project's chaotic launch.

As per Nansen's LIBRA – The Aftermath, onchain data showed that a whopping 86% of traders lost $251 million, while the smaller chunk of traders who dabbled into LIBRA saw $180 million in profits.

The token started falling from its meteoric rise to a $4.55 billion market cap as questions emerged after Hayden Davis, a co-creator of the cryptocurrency, dismissed the coin as "just a meme coin in stark contrast to its initial framing as a tool for Argentina's economy."

Amid mounting backlash over the "rug pull," as many crypto users dubbed LIBRA, Milei deleted his endorsement post. Milei's office said earlier this week that he was not involved in the project, although he did meet with representatives of the launching team beforehand.

Milei has been sued by Argentine lawyers amid continuing concerns over his supposed involvement in the memecoin.

"We see very tangible onchain evidence showing a group 'insiders' unilaterally profiting off of the masses who got involved (e.g., traded the token)," Nansen researchers noted.

Key Highlights of the $LIBRA Aftermath

Nansen's report had some striking findings, including the finding that two wallets bought LIBRA token at 22:01 p.m. UTC only to sell it by 22:44 p.m. UTC during the token launch. The said wallets made $5.4 million in total profits.

• Some early traders could've been bots – Nansen observed that out of 57 wallets that quickly entered the LIBRA trade, 37 made over $1,000 in profit, suggesting some of the early entrants may have been bots instead of major players that usually invest millions.
• Most traders ended up with realized losses – 70% of wallets with LIBRA lost money from Sunday through Tuesday, regardless of their time of entry.
• Unrealized losses eclipsed unrealized gains – The report noted that unrealized losses far exceed unrealized gains by millions, and that's still without data on likely losses yet to be realized.
• A "sniper" bagged millions – Among the "snipers" that traded LIBRA, one realized a profit of $6.5 million. The wallet in question was found to have links to trader wallets Frankuniversity.eth, hartej.eth, and funded_khanhamzah_on_Friendtech. Nansen noted there's not enough data at this point to confirm if the wallets belong to the same person.
• Largest single winner could've bagged $25 million – The LIBRA launch's largest winner could have taken home profits of $25 million, but Nansen noted that the trader appears to have sold at a loss at some points, so the exact profit sum is unclear.
• Dave Portnoy's losses and wins – The controversial social media personality lost millions on the token but was later refunded $5 million. It is unclear if other traders who lost huge amounts were also refunded.

What was initially touted by Milei as a crypto asset that could help drive growth in Argentina's economy didn't end well. Still, onchain data shows that there are LIBRA holders despite the unraveling of the project.

"Our onchain analysis shows the consequences of 'pump-and-dump' token schemes on different profiles of on-chain traders," Aurelie Barthere, principal research analyst at Nansen, told International Business Times.

"This case obviously does not shed a very positive light on the utility of crypto, especially when preeminent political figures are involved," she added.

Despite the apparent breakdown in trust among some crypto users and, potentially, among curious Web2 users who would want to jump into Web3 but lost the desire to do so at this point due to the LIBRA saga, there remains hope for a recovery.

"The technological advantages of the blockchain (almost instant settlement of cross-border transactions for example) and financial innovations onchain will hopefully take the spotlight back in the next few months and years, fostered by regulatory frameworks," Barthere said.

Among such regulatory shifts that could contribute to rebuilding trust within the space is the recently-formed crypto task force in the U.S., which has yet to communicate its first progress on stablecoin regulation and other related topics, but is a step forward in the right direction.