Argentina's Stock Market Plummets Amid Milei Meme Coin Controversy

Argentina’s stock market has seen a significant dip, following allegations of fraud against the country’s president for endorsing a meme coin.

What Happened: Argentina’s S&P Merval index, which tracks the performance of the country’s largest companies, dropped by over 5% at the opening of markets in Buenos Aires on Monday. The index has since seen a slight recovery but is still 3% lower than its closing value on Friday.

According to the report, the upheaval in Argentina’s markets was sparked when President Javier Milei endorsed a Solana-based token called LIBRA on X on Friday. Milei, in a now-deleted post, claimed that the project aimed to stimulate the Argentine economy by funding local small businesses and startups.

However, following a surge in LIBRA’s market value to over $4 billion, it crashed by nearly 90% within hours of the launch. Blockchain tracking firms warned that a small number of wallets held most of the LIBRA token, a characteristic of a rug pull.

Also Read: Javier Milei Faces Impeachment For Promoting Tainted LIBRA Memecoin After Pump And Dump — Argentine Lawyers File Criminal Charges

In the crypto industry, rug pulls occur when developers abandon a project after raising funds, cashing out and retaining investor funds.

Kelsier Ventures CEO Hayden Davis, Milei’s advisor on the LIBRA project, admitted in an interview with YouTuber CoffeeZilla that he had withdrawn approximately $100 million from the LIBRA liquidity pool and was in control of the funds. 

Davis, however, stated that he had no plans to personally profit from these funds and was awaiting instructions from Milei and the Argentine government on how to proceed.

Following these events, the president’s office has initiated an investigation and denied any prior knowledge of the LIBRA project. 

Lawyers in Argentina have filed fraud charges against Milei, with a judge expected to act on the case as early as Monday, as reported by the Associated Press.

Why It Matters: This incident highlights the potential risks and volatility associated with the crypto market. It also underscores the need for stringent regulatory oversight and transparency in the crypto industry to prevent fraudulent activities and protect investors.

The outcome of this case could have significant implications for the future of cryptocurrency regulation in Argentina and potentially influence policies in other countries.

Read Next

Venture Capitalist Who Predicted 2022 Crypto Market Bottom Expects 2,500% Rally For Solana