Milei's Meme Coin Misadventure: Following in Trump's Crypto Footsteps
TL; DR — it didn’t go well
They say that imitation is the sincerest form of flattery. In political opinions, matters of policy and even hair-styles there appears to be little to separate many of the world’s most notorious right-wing leaders of today.
This week has also seen Argentina’s President Javier Milei promote the launch of a crypto meme coin called $LIBRA, just as Donald Trump did on the eve of his inauguration for a second term in the White House with the launch of the $TRUMP coin.
Milei, who has been a vocal advocate for economic reform in Argentina, announced the launch of the meme coin on social media claiming it would boost Argentina’s economy by funding small businesses and entrepreneurs. His endorsement led to a rapid surge in the coin’s value, reaching over $4 billion in market capitalization within hours.
However, just as quickly as it rose, the coin’s value plummeted, dropping to less than $0.50 within hours leaving many investors with substantial losses. The incident has been described as an “unprecedented scandal” by his political opponents, and Milei is now facing calls for impeachment and legal investigations for fraud.
The Argentinian president has now deleted the social media posts in question, and appears to be distancing himself from the project, in spite of the fact that his deniability is far from plausible.
By anyone’s standards, the $LIBRA project would be classed as a ‘rug pull’.
Characteristics of a Rug Pull
A rug pull is a type of cryptocurrency scam where developers hype up a project to attract investors and then abruptly abandon it, taking the funds with them. There are two main types of rug pulls: hard pulls and soft pulls. In a hard pull, developers suddenly exit the project, causing the token’s value to collapse immediately.
In a soft pull, developers gradually drain the liquidity, causing the token’s value to drop slowly over time. Common signs of a rug pull include a lack of transparency, unrealistic promises, low liquidity, and suspicious price movements.
The $LIBRA project appears to tick all the boxes for a rug pull, and the abuse of power and influence by Milei in promoting and bringing publicity to the project is the icing on the cake in allowing those at the heart of the project to execute what appears to have been a well thought-through plan.
$TRUMP vs $LIBRA
The $TRUMP project has drawn criticism for a variety of reasons. Within the crypto market and amongst Bitcoiners in particular, there’s a frustration that the speed with which the project was launched and the transparent way in which Trump’s team leveraged his influence for personal-enrichment, while creating a coin that has little significant or material purpose, has done nothing but reinforce the mistrust that many outside the industry already have towards crypto.
There’s also an angle that the existence of an unregulated crypto token, the majority of which is held by the most powerful person on earth, offers an obfuscated route for the payment of bribes for the purchase of influence.
In the case of $LIBRA however, the characteristic signs of a rug pull make it appear equally shady, and on the part of Milei it seems like nothing more than a misguided attempt at personal enrichment that backfired. Even if Milei himself stood to gain little, the leverage of his influence by the creators of the project who seem likely to share links with the controversial Argentinian premier, seems like a transparent abuse of power.
The shape of things to come in crypto?
While both political leaders used meme coins to promote their agendas, the outcomes were vastly different, with Milei’s coin resulting in significant financial losses and political fallout, whereas Trump’s coin seems not have had the same impact. That may well be due to his actions and statements since pushing the $TRUMP debacle to the back of everyone’s minds.
Nonetheless, both projects have illustrated how personal influence can be combined with the infrastructure of cryptocurrency and abused with impunity. The results however, are far from guaranteed, and merely reinforce the need for crypto investors to act with diligence, foresight and with their eyes open to the potential risks and pitfalls.
Get back to Bitcoin
Financial scams have been around for as long as money has, and politicians are no-more immune to opportunities to get rich than ayone else. With the failure of $LIBRA and the full effects on Milei’s political career yet to emerge, it seems that we may finally be approaching the end of the age of meme-coins, which is something that maximalists of mainstream cryptocurrencies like Bitcoin, will welcome.
Note: This article is for informational purposes only. It should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.