By Jokin Mendizábal in Buenos Aires
On February 14 at seven o’clock in the evening, an event was going to break out that would impact the career of Argentine President Javier Milei. That day the Argentine president destroyed, in one fell swoop, all his delusions of grandeur in the international arena and also, although a little more slowly, within the borders of the country that he claims to govern but that in reality he misgoverns by means of Decrees of Necessity and Urgency (DNU) and despising, and corrupting, from his first speech, the legislative power.
It was a “perfect plan” to obtain a fortune valued at many millions of dollars that he could not fail. Or so thought the self-proclaimed candidate for the Nobel Prize in economics, a self-perceived expert in cryptocurrencies.
What the scam consisted of
It was not going to be the first time that a scam was committed in the financial universe of cryptocurrencies, what it was going to be is the first time that the president of a country led the planning and execution of such a scam. What was the mechanism of the scam?
A cryptocurrency had to be created, in this case it was called $Libra. In itself, the creation of this cryptocurrency would not have caused any harm to anyone because no one would have known about it. For this type of cryptocurrency to reach thousands of people, as in this case, a well-known character needs to make it known through their social networks. Such was the case with the meme[see note 1] $Libra that was promoted by Milei just the minute of its creation, causing an exponential increase in its initial value.
To get an idea of what happened, the initial value of a $Libra was $0.00001, that is, its value was almost zero. The “trick” was that the value of the coin could be bought so low that the first who bought it could acquire it at a price very close to zero dollars, by buying a very important amount in the first minutes, the price of the coin would rise exponentially and when the price had reached a convenient price, go out to sell quickly making profits in a few minutes.
The problem was that 80% of the assets were in five wallets, and most likely all of them would match the creators of the scam. This followed a dynamic common to the so-called memecoins. The impact was immediate. In less than 40 minutes, the price of $Libra soared to US$ 4.56, reaching a market capitalization of US$ 4,600 mn, more than several Merval [Argentina’s stock market] companies. However, the enthusiasm was short-lived: the price collapsed and, in just five hours, fell to US$ 0.17.
Pump, Dump, then rug-pulling
Everything is ready for the big scam, first they had caused what in crypto and financial jargon they call the Pump and Dump, ie cause the sudden rise and then the fall of the values of the coin in question, through what they call “pulling the rug” or “rug pulling”, which is when a cryptocurrency is created and promoted profusely to convince investors to buy and invest it money in it. Then they “pull the rug” and take the profits leaving a line of victims. All perfectly planned.
In the uproar of the first moments, there was speculation that Milei’s account had been hacked. However, even Elon Musk tweeted confirming Milei’s tweet. Libertarian deputy, Lilia Lemoine, was in charge of confirming that the post was real and 38 minutes after midnight a kind of disclaimer arrived.
The President assured that he has “no link” with the undertaking and that he disseminated it without being “internalized of the details.” Without apologizing or giving further explanations, he closed with his typical aggressive script: “To the filthy rats of the political caste who want to take advantage of this situation to do harm, I want to say that every day they confirm how lowly politicians are, and increase our conviction to kick them in of the ass. VLLC!”. [Viva la libertad, carajo! or VLLC, is Milei’s personal catch-phrase and translates as Long Live Freedom, Damn It!]
The sequence of events
…as explained by experts in parliamentary committee on February 25 and summarized by the newspaper Página 12
In the first place, the minute by minute reported by the specialist Fernando Molina, in Congress, speaks for itself of the privileged information in the moment prior to the promotion of $Libra by the President and therefore, the configuration of the scam:
- “On February 14 at 18:38 the token is created[See note 2] $Libra, a billion units are created.”
- “At 6:51 p.m., ten minutes before Milei’s tweet, the ‘liquidity pool’ is created, that is, the market in which Libra can be bought and sold. This point is very important because it means that $Libra was available for purchase at 6:51 p.m. and no one was buying.”
- “At 19:01:00 the first purchases begin.”
- “Until now the President had not made his tweet; there were still 22 seconds to go before Milei’s tweet, but for some reason there were already people buying Libra.”
- “There were 87 transactions from 74 different wallets and a total of $13.5mn was purchased.”
- “At 19:01:22 President Milei publishes his tweet about the project “Viva la libertad”, associated with the $Libra token.”
The scandal unleashed by the multimillion-dollar scam that without Milei’s participation simply could not have occurred, has revealed, once again, the shielding that Milei enjoys before the Argentine justice system and in general all the political and economic actors of the right.
Video leak showing president corrected by adviser
The video that someone from the media group La Nación leaked, where it is clearly seen that the questions had been agreed with the journalist and where he follows in front of the camera the directives of the bewildered President, has its highest point when Milei says that his Minister of Justice will surely defend him. Just a few minutes earlier he had said that the dissemination not the promotion of $Libra had been done on a personal level, something that the journalist discusses by telling him that he is always president.
This scene is interrupted by Santiago Caputo, presidential advisor, and he speaks in Milei’s ear advising him not to get into the mess he was getting into anymore. It is highly recommended to watch the video.
There has been a lot of conjecture about who and why that part of the interview that hurt Milei so much was leaked, since the media group of La Nación supports Milei’s economic policy. There are those who say that it was the long arm of Magneto, owner of the strongest media-business group in Argentina, Clarín, with which he is at odds for economic reasons in relation to the purchase of Clarín from Telefónica. But this is a difficult topic to know for now.
In any case, most of the pro-government television networks have tried all the time to vindicate Milei, trying to show him as the victim of a deception that took advantage of him, etc.
New York Times against Milei
In the New York Times, a journalist specializing in Latin America, Mary Anastasia O’Grady, published a column in which, in addition to criticizing in harsh terms Milei’s appointment of a pro-party judge, she said that the cryptocurrency scandal $Libra “had all the indications of a scam.”
The journalist, who titled her article “Milei suffers self-inflicted wounds“, criticised the appointment of a judge with a bad reputation and such a bad CV that even some supporters of the president have difficulty explaining the decisions.
In general, all the international press has criticized Milei’s participation in this scam, which has meant a profit for the group that organised it, an estimated amount of $100 mn.
Where is the money?
Hayden Mark Davis, creator of the cryptocurrency, has spoken again through a message in which he says that he will appear in the case which is being investigated in Argentina. He claims he is innocent, and says that he has under his control, and keeps protected, millions of dollars linked to $Libra, that caused millions of dollars in losses to thousands of investors in a few hours.
Davis is part of the group of cryptocurrency experts who had been meeting with Milei and his sister at the government house for several months last year. In this scandal, things have been uncovered that reveal the degree of corruption, such as the role of collector carried out by [president Milei’s sister] Carina Milei, acting as an intermediary between many businessmen who wanted to meet with the president, to participate in different investment and business plans. These businessmen were asked for anything from $5,000 to $50,000, or even half a million dollars.
The cryptocurrency scandal alone would have been enough for a president in a country with some democratic health to resign. But in today’s Argentina, as in almost all Latin American countries, with the enormous levels of corruption that have been reached, that go right across governments, that is not going to happen.
This is mainly due to the judicial and media shielding, but not only that. What underlies this general situation, and in Argentina in particular, is the momentous decision of the national capitalist class to govern by destroying all vestiges of rights and welfare, which especially in some countries such as Argentina, they had been maintaining.
Milei came into government saying things that someone who pretended to be president had never dared before. Hate speech entered like a hot knife in butter among the wealthy classes and broad sectors of the middle classes. Milei promised to put an end to “the left-handed sons of bitches” and that included everything from Peronists to Trotskyists, including any organisation that opposed him, including social organisations, soup kitchens, independent journalists and a host of others.
That suited the recalcitrant and anti-Peronist right like a silk glove. The problem was, when the same discourse penetrated sectors of the working class in all its strata, reaching the most submerged inhabitants of the popular neighbourhoods, also known as barrios [slums]. Milei fiercely criticized the political caste and that permeated these most impoverished sectors that have been suffering from governments that did nothing for them, like Macri’s, or did so little that it was not noticeable, like Alberto Fernández’s.
Polls show Milei’s support has suffered big fall
Today, 13 months after his arrival in government, Milei is going through a huge drop in his social support. A consulting firm friend of the government, Opina, points to a fall of 10 points compared to its last measurements. The poll did not ask specifically about the $Libra case, but Opina’s interpretation was that it had an impact on the drop in support. “The political crisis inaugurated by the crypto scandal” Opina’s report says, “seems to have left consequences in public opinion,”.
Discontent is growing by the moment and we are seeing it in the attendance at the different demonstrations since the one on February 1, called in repudiation of the official discourse against the LGBT+ community and women, which was attended by a million people in Buenos Aires alone, as well as many other cities in the rest of the country.
The 8M demonstration has also been larger than those of the last two years. And today, March 12, supporters from more than 50 soccer clubs will go in their team colours to the demonstration of the retirees who Wednesday after Wednesday demonstrate in front of the National Congress, being systematically repressed by the police with all the viciousness of which they are capable. We are waiting to see what happens in this demonstration.
This is a year of mid-term elections, where part of the deputies and part of the senators are re-elected. This is a year in which the Argentine people have a lot at stake and it is necessary to follow up on these events.
Notes
1-Memes are a type of cryptocurrency that is usually inspired by memes, characters or internet trends. They are often supported by enthusiastic online communities and are usually intended to be lighthearted and fun. Some examples of meme coins are Dogecoin, Shiba Inu, and others that are usually associated with entertainment rather than usability.
2-Tokens are a unit of digital value that is created and recorded in a blockchain. Tokens are generated using smart contracts, which are pieces of code that determine the rules or operation of a crypto tool or platform. Tokens can serve a variety of purposes, such as offering benefits or rewards to their owners.
[Translated from the website porelsocialismo. The original can be found here.
Photographs from Wikimedia Commons, here]
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