Latam Crypto Report #22: Breaking Down Argentina's Crypto Scandal

Also: Coinbase expands into Argentina; Bitfarms to sell 200MW Paraguay site

Hola a todos! ??

Welcome back to the ??Latam Crypto Report, where contributor Kristin Majcher compiles and analyzes the biggest crypto stories in the region.

If you’ve been following us for a while, you know that we usually delve into three main stories before our rundown of major crypto headlines from around the region. However, this week we’ll focus on taking a deeper look at some recommended reading to better understand Argentina’s ongoing “Cryptogate” scandal, which has dominated headlines in recent weeks. We’ll take a look at:

• How Argentina’s $LIBRA crypto scandal unfolded
• The players involved in developing the project
• What to look out for in coming weeks

Editor's take: The TLDR is that this incident is pretty bad — both for crypto and Milei. It fuses all of the worst elements of crypto in a gigantic dung heap: memecoin casino rug pulls, grifty insiders claiming to “represent” crypto on the global stage, dodgy partnerships to make a scammy coin appear legit and so on. Solana’s reputation and price have also been dealt a major blow.

The crypto world will forget about this in a few weeks’ time, but Milei’s opponents will be using this against him for the rest of his term. We’ll be monitoring to see what impacts will be felt on Argentina’s blossoming crypto scene.

Before we begin, we’d like to extend a big thanks to all of our subscribers who read ????Brazil Crypto Report and ??Latam Crypto Report and allow us to take the time to get to the bottom of complex crypto issues such as the $LIBRA situation.

Feel free to follow Kristin on X and LinkedIn to share any crypto news or say hello.

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Argentina’s $LIBRA Scandal: Required Reading

By now, you’ve surely heard that Argentina’s President Javier Milei became embroiled in a crypto scandal on February 14 after posting the contract for a token that quickly collapsed.

Many more details have since emerged about the Viva la Libertad project and $LIBRA, and how these initiatives ended up on Milei’s social media feed in the first place.

At the same time, major questions still remain about what kinds of conversations about $LIBRA happened behind closed doors, and to what extent the scandal might affect Milei’s long-term credibility and Argentina’s local crypto industry. As we’ve noted here before, this isn’t the first time Milei has allegedly promoted a dubious crypto project.

(AWS editor’s note: there is definitely a bigger story at play here about how previously unknown figures like Hayden Davis have been able to grift their way into the inner circles of Latin American power players and convince them to launch crypto projects. We saw this with Jack Mallers in El Salvador in 2021, and now we’re seeing it again with Eike Batista in Brazil)

In the past few weeks, we at Latam Crypto Report and Brazil Crypto Report have been sifting through overwhelming amounts of information to understand how the scandal unfolded and what happens now.

Here are some of the most useful articles and resources we’ve found so far. We hope it helps piece together some of the main themes.

What Happened, Exactly?

If you’re starting from square one, DLNews and the Buenos Aires Herald offer basic timelines of what happened in the first few hours and days of the $LIBRA collapse. Here are the main details:

• On February 14 just after 7 p.m. local time, Milei posted on X about a new project centered on a new cryptocurrency called $LIBRA. He said the project would be “dedicated to encouraging the growth of the Argentine economy by funding small Argentine businesses and startups.”
• The token took off but quickly crashed as investors started selling. In the next few hours, chaos ensued. Milei deleted his first tweet at about 12:35 a.m. after the token collapsed, replacing it with another message saying that he “was not aware of the details of the project” and decided to stop sharing information about it when he learned more. But it was too late. Tens of thousands of wallets participated and the majority lost money, quickly raising suspicions within the crypto community that the project was a classic memecoin rug pull.
• Nansen issued a report detailing $LIBRA’s speedy boom and bust, which showed that a small number of wallets profited while most lost out. The analysis found that out of 15,431 wallets with absolute gains or losses of more than $1,000, about 86% showed losses totaling $251 million. Meanwhile, one particular wallet made a $5.1 million profit.
• $LIBRA’s market cap hit more than $4.5 billion, but quickly fell by 90% as “insiders offloaded massive numbers of tokens,” CoinDesk reported.

What Did the Project Entail?

Milei posted about a private project that appeared to be aimed at helping entrepreneurs called Viva la Libertad, which featured a new token called $LIBRA. He also included the Solana contract address in his initial post to help people find the new cryptocurrency.

• The Viva la Libertad project (whose website is still online) said its mission was “to boost the Argentine economy by funding small projects and local businesses, supporting those who seek to grow their ventures and contribute to the country’s development.”
• A key part of that project was $LIBRA, a token minted on Solana that was reportedly created minutes before Milei had posted about it. “With this token, we aim to channel funding efficiently and in a decentralized manner, allowing investors and citizens to take part in Argentina’s growth,” the same website says.

Who Was (And Wasn’t) Involved?

Much of the scrutiny around $LIBRA has centered on Argentina’s President Javier Milei, given that he posted details about the project to his millions of followers on X.

However, others were found to have ties to $LIBRA, access to the president, or both. Some have downplayed their involvement or distanced themselves from the project as it attracted more negative media attention.

Argentina’s President Javier Milei has said he did not have any role in developing the $LIBRA token, and quickly ordered Argentina’s anti-corruption office to conduct a probe.

In an interview with local TV outlet Todo Noticias, Milei said he did not promote the project and only shared the information, denying any allegations of wrongdoing. A judge is now leading an investigation.

Kelsier Ventures CEO Hayden Davis, a previously little-known figure, has emerged as a central player in the $LIBRA saga. He had a main role in developing the token and was also involved in Melania Trump memecoin.

• Davis and Milei met on January 30 at the Casa Rosada, an official statement from Milei’s office shows.
• In a February 15 video, Davis described himself as Milei’s “advisor” and proposed reinvesting the funds back into $LIBRA. (Milei’s office said Davis “did not have and does not have any current connection with the Argentine government.”)

• In an extensive (and probably ill-advised) interview with YouTuber Coffeezilla, Davis claimed the project was “not a rug” but instead a “plan gone miserably wrong.” He noted that he was still sitting on about $100 million in funds as a custodian and was trying to figure out what to do with them. In that video, he also discussed his team’s involvement in “sniping” tokens they had launched.
• CoinDesk and Argentine newspaper La Nación both published stories alleging that Davis bragged about sending money to Milei’s sister in texts. Davis has since denied making any of these payments, but the story raised a bigger question about to what extent anyone involved may have been paying for access to the president.
• In a newer article released on February 28, the New York Times reported it had viewed and obtained messages showing Davis had talked to others about having “control” over the president and being able to broker deals.

KIP Protocol CEO Julian Peh confirmed on X that his company was involved in the project in the hours after $LIBRA’s aftermath, saying: “The funds are still on chain and not a single SOL will be moved.” Since then, KIP has issued two blog posts on its website to clarify information.

• KIP and Peh were named in a February 15 official statement issued by Milei’s office, which detailed a meeting on October 19, 2024 that the president and his spokesman attended with Peh and Tech Forum co-founder Mauricio Novelli. KIP was an official sponsor of the Tech Forum Argentina trade show.
• KIP said Peh did meet with Milei in October 2024 after Novelli introduced them. However, the company disputed key details in Milei’s statement, saying it had never mentioned the Viva La Libertad project by name during that October meeting and did not discuss any specific initiatives or a token launch with the president at that time.
• KIP Protocol then said in a February 24 blog post that it was “invited to assist in managing the project’s financing initiative for Argentinian SMEs” by Novelli on February 13, but that this work had not yet happened. The company said it was not involved in the token launch and did not profit from it.
• KIP Protocol also made two separate announcements related to Argentina in the weeks before the launch, which did not mention $LIBRA. The company announced an agreement with the National Technological University in Buenos Aires on February 12 and also said it was invited to join the City of Buenos Aires’ blockchain committee on January 6. However, Buenos Aires’ Secretariat of Innovation and Digital Transformation issued a statement on February 16 saying the city government does not have a blockchain committee or any links to the company. A university representative also told a local media outlet that while the university had exchanged emails with the company, it had not signed a formal agreement ??♂?

Tech Forum co-founder Mauricio Novelli was named in the official statement from Milei’s office about having met with the president and KIP Protocol in October.

• Tech Forum then issued a statement distancing itself from the token, saying that it organizes events and had nothing to do with any $LIBRA funds.
• Days later, the New York Times published a February 28 article alleging that Novelli was "charging sponsors $50,000 for a speaking slot and a meet-and-greet with Mr. Milei,” at the October conference, citing "four attendees who paid the fee.” Novelli declined to comment for that article, although local media outlets later reported that he “emphatically” denied that he received any money to facilitate meetings with government authorities.

What Happens Now?

One major question is to what extent $LIBRA will impact Milei’s credibility in the long run, as well as what it means for Argentina’s crypto and blockchain communities. We can expect investigators to focus on what Milei and those in his inner circle actually knew about the project, as well as any evidence that individuals were selling access to the president.

• Some opposition politicians have called for Milei to be impeached after the $LIBRA scandal, but it is unclear how that could develop. For now, one thing to focus on will be how the president navigates political relationships ahead of midterm elections, Reuters pointed out.
• A judge in Argentina has been tasked with investigating fraud allegations against the president, Local media outlets reported that more than 100 complaints had already been filed by February 18, both in Argentina and the US.
• Meanwhile, Solana’s price is the lowest it has been in months.
• Ethereum co-founder Vitalik Buterin said he was still “very optimistic” about Argentina in an X post. “The recent news should be taken not as a reason to give up, but rather as an example of why education is so important,” he said. Separately, he also floated hosting the Devconnect conference in Argentina, to which Milei replied that it would be an “honor” and a “great opportunity” for the country.

To wrap up, we’ll leave you with a must-watch video from Cardano Founder Charles Hoskinson where he shares his take on the $LIBRA situation and his “very frustrating experience” in Argentina. “

“We had all of these people that we’d encounter along the way, and they say: ‘Hey, you know, give us a little somethin’ somethin’, we can get you a meeting, and…magical things can happen.’” (he insists he refused these offers)

?? Latin America Crypto News Rundown

Here’s where we break down Latin America crypto headlines from the past few weeks, organized by country and region. If you don’t see a country listed, it’s simply due to the news flow during a particular week.

Regional News

• Visa issued its billionth token in Latin America and the Caribbean through its Visa Token Service. (Visa, BeInCrypto, Cointelegraph)
• Tether wants to raise its stake in Adecoagro to 51%. (Cointelegraph, Bloomberg, BeInCrypto, CoinDesk)
• Mastercard and Ava Labs issued a new whitepaper on asset tokenization. (Mastercard, Cointelegraph)
• Staking service provider SenseiNode is operating in several Latin American countries. (CoinDesk)
• Avalanche’s Visa card is now live. (CoinDesk)
• Ninety-five percent of Latin American crypto users surveyed planned to expand their holdings this year, a Binance Research study showed. (CoinDesk)
• Nexo and Sphere formed a strategic partnership aimed at developing cross-border business payments in countries such as Mexico, Brazil and Argentina. (Nexo, BeInCrypto)
• Tether.io led a $10 million funding round for cross-border payments firm MANSA , which aims to expand in Latin America and Southeast Asia. (The Block, TechCrunch, Cointelegraph)

South America

???? Argentina

• Argentines are using crypto apps connected with Brazil’s instant payment system Pix to pay for purchases there while on vacation. (Livecoins, Todo Noticias)
• Coinbase announced it would expand to Argentina after securing a Virtual Asset Service Provider (VASP) registration. (Coinbase, Cointelegraph, CoinDesk)
• Five people in Santa Fé were detained for their alleged role in a scheme to offer crypto in exchange for scanning people’s irises. (El Litoral, CritpoFacil)
• Authorities were investigating a kiosco in Zapala, Neuquén where a person was reportedly scanning people’s irises in exchange for money. (Livecoins, Río Negro)
• Argentina passed a new resolution aimed at helping authorities combat crypto crimes. (BeInCrypto, Livecoins)
• Bitfarms, Mercado Libre and Globant lead the country’s corporate bitcoin reserves. (BeInCrypto, Livecoins, Cointelegraph)

???? Bolivia

• Banco Unión’s X account was hacked to make it seem like the president was promoting a new cryptocurrency, which ended up being fake. (BeInCrypto)

???? Chile

• Chile’s Supreme Court reportedly told World to eliminate a minor’s biometric information after upholding a protection appeal filed by her father, who said it was taken without proper consent from her parents. (BeInCrypto, CIPER)

???? Colombia

• UNICEF Colombia launched an NFT collection to raise money for children suffering from malnutrition. (BeInCrypto, Unicef, CriptoNoticias)
• A court approved the extradition of a man being investigated in New York for his alleged involvement in a money laundering scheme using crypto. (Caracol, Infobae)
• Senator Gustavo Moreno introduced a bill proposing a regulatory framework for crypto in the country. (La República, Bloomberg Línea, El Tiempo)

???? Ecuador

• Ecuador’s election authority reportedly used blockchain technology to verify votes in its recent general elections. (El Comercio, Cointelegraph, BeInCrypto)

???? Paraguay

• The Cardano community held an educational forum in Paraguay. (BeInCrypto)
• Bitfarms agreed to sell its 200-megawatt (MW) facility in Yguazú to Hive Digital Technologies in an $85 million deal that includes the site and other obligations. (Cointelegraph, BeInCrypto, The Block)
• Paraguay’s grid operator seized 236 machines in its latest crackdown on a clandestine mining operation. (Livecoins)

???? Peru

• Peru’s tax authority is considering applying income tax to crypto gains. (BeInCrypto, CriptoNoticias)

????Uruguay

• A government agency launched an investigation into a suspected personal data leak where information was put up for sale via Monero payments. (BeInCrypto)

???? Venezuela

• CryptoMKT CEO Maria Fernanda Juppet Ewing gave insights into why the company is seeing rapid growth in Venezuela. (BeInCrypto, Banca y Negocios)

Central America, Mexico & Caribbean

???? Cuba

• Cuba’s central bank authorized a Lithuanian company to operate with crypto in the country for a year, BeInCrypto reported. (BeInCrypto, Diario de Cuba)

????Guatemala

• The consortium developing the Interoceanic Corridor of Guatemala launched a public token offering in El Salvador to raise funds for the project. (BeInCrypto, Cointelegraph, La Prensa Gráfica)

???? Dominican Republic

• Jairo González was sentenced to five years in prison for crypto and stock-related scams. (BeInCrypto, Listín Diario)

???? Mexico

• Ripio received its money transmitter license in Mexico. (BeInCrypto, Cointelegraph, iProUP)
• Finnovista released its Fintech Radar México 2025, presented with Mastercard and Galileo. (Finnovista, BeInCrypto, El Economista)

???????? Puerto Rico

• The Puerto Rico Blockchain Trade Association (PRBTA) discussed the island’s potential as a blockchain hub. (BeInCrypto)
• Pantera Capital founder Dan Morehead, who moved to Puerto Rico several years ago, is facing a U.S. Senate tax inquiry, the New York Times reported. (The New York Times, Cointelegraph)

????Costa Rica

• State-owned Banco Nacional is launching the country’s first bitcoin ETF through its local investment arm BN Fundos. (CoinDesk)

???? El Salvador

• CoinDesk’s Tom Carreras has a four-part series about bitcoin adoption in El Salvador based on a recent visit to the country.
• The International Monetary Fund (IMF) approved a $1.4 billion loan to El Salvador on February 26, following news in December that the country would make amendments to its bitcoin policies. (IMF)
• El Salvador’s Congress quickly approved those changes in late January. The government agreed to not accept crypto for tax payments, make it voluntary for businesses to accept bitcoin and unwind its involvement in the Chivo wallet (Decrypt, Reuters, Portal do Bitcoin, Bitcoin Magazine, Cointelegraph, Bloomberg, Globo, Exame)
• El Salvador paused its daily bitcoin purchases for about a week but then resumed them. (Bitcoin.com, BeInCrypto)
• Tether plans to build a skyscraper called Tether Tower in San Salvador. (Bitcoin.com, BeInCrypto)
• As crypto firms move to El Salvador, banking access in the US still poses an issue, Cointelegraph reported. (Cointelegraph)
• The Plan B forum took place on January 30 and 31. (BeInCrypto, La Prensa Gráfica)