In what has quickly become the most significant political crisis of Javier Milei’s presidency, Argentina’s libertarian leader now faces mounting scrutiny over a cryptocurrency scandal that has expanded to include allegations against his powerful sister and gatekeeper, Karina Milei.
The Scandal Unfolds
The controversy centers around a cryptocurrency called Libra, which experienced a dramatic surge and subsequent crash after President Milei promoted it on social media platform X last Friday. According to recent reports from Argentina’s La Nacion newspaper and industry publication CoinDesk, Hayden Davis, a key figure behind the Libra token, allegedly claimed in text messages that he was making payments to Karina Milei to secure the president’s promotional support.
The scandal has already had tangible effects on Argentina’s markets, with sovereign bonds underperforming compared to other emerging markets. Though the stock market recovered with a 6% surge on Tuesday, this followed a similar drop the previous day, highlighting the volatility created by the controversy.
The Role of Karina Milei
Karina Milei holds the official title of general secretary in her brother’s administration, but her influence extends far beyond this formal role. She has emerged as the president’s most trusted advisor and strategist, accompanying him to high-profile international meetings and serving as his primary gatekeeper.
According to La Nacion’s reporting, it was Karina who initially met with local crypto consultant Mauricio Novelli at the presidential palace. Novelli later introduced President Milei to several parties involved with the Libra memecoin project.
The phrase “Talk to Kari” has reportedly become commonplace among those seeking access to the president, underscoring her powerful position as the ultimate arbiter of who gains an audience with Argentina’s leader.
Conflicting Accounts
Both President Milei and Hayden Davis have denied key allegations, though their accounts conflict in significant ways:
– President Milei has vehemently denied knowing that his promotion would cause investors to lose money
– Davis denies making payments to the president specifically, though his statements to media outlets have been inconsistent
– Both confirm multiple meetings occurred in Buenos Aires
– The Milei administration has downplayed the relationship with Davis, while Davis has described himself as an advisor working on “tokenization” projects with the president
In an interview with Barstool Sports, Davis acknowledged making money from Libra and characterized the situation as a “botched launch.” He also claimed to believe Milei is not corrupt, suggesting instead that profits went to people on the president’s team or those he “thought was Milei’s team.”
The Failed Damage Control
President Milei’s attempts to contain the scandal backfired spectacularly when local news network Todo Noticias accidentally broadcast a behind-the-scenes moment where the president’s adviser, Santiago Caputo, was seen instructing journalist Jonatan Viale to omit a question during an interview. This apparent attempt to control the narrative only intensified public scrutiny.
Reflecting on the scandal, President Milei acknowledged the need for greater caution regarding access: “We have decided we obviously can’t keep living how we did before and allow that everybody have access to us so easily. Sadly we have to understand that our role has to have filters.”
Legal Implications
The situation has taken a serious legal turn, with President Milei now facing fraud charges related to alleged influence-peddling and the collapsed cryptocurrency project. The token’s value plummeted by more than 90% within hours of its peak, with insiders reportedly extracting over $107 million in liquidity.
U.S. authorities are reportedly considering jurisdiction in the case due to Davis’s American citizenship and the involvement of U.S.-based investors. Blockchain analysts have also connected Davis to other failed cryptocurrency launches, including a token associated with former U.S. First Lady Melania Trump.
The Broader Context
This scandal represents a significant challenge to Milei’s presidency, which has focused on economic reforms to address Argentina’s long-standing financial troubles. As a self-proclaimed libertarian who champions free markets, the allegations of market manipulation and insider dealing strike at the heart of his political brand.
The controversy comes at a particularly sensitive time, as President Milei and his sister are scheduled to visit Washington, potentially meeting with former President Donald Trump during a conservative political event.
As investigations continue, several key questions remain unanswered:
– Will the Argentine government respond officially to the CoinDesk report?
– How will international investors view Argentina’s financial markets in light of these allegations?
– What impact might this have on Milei’s economic reform agenda?
– Will Karina Milei break her characteristic silence to address the allegations directly?
The coming weeks will likely determine whether this scandal represents a temporary setback or a fundamental challenge to the Milei administration’s credibility and political capital. For now, the cryptocurrency controversy has cast an uncomfortable spotlight on the powerful sibling relationship at the center of Argentina’s government.
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