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The scandal began with a tweet.
"The world wants to invest in Argentina," Javier Milei, Argentina's president, posted at 7:01 p.m. on Valentine's Day, offering a code to buy a new cryptocurrency.
The digital coin was called $Libra, and it had been created 23 minutes earlier.
Over the next few hours, thousands of people invested. $Libra's value skyrocketed.
Then it swiftly collapsed. The largest stakeholders had sold their coins, leaving almost everyone else with a collective $250 million in losses.
To cryptocurrency veterans, it was a classic "rug-pull." A celebrity touts a new digital coin, prices soar and then insiders who own most of the coins pull the rug: They sell their stakes for a big profit at the expense of amateur investors who got in later.
To Argentina, it was a national scandal. The president, critics said, had just scammed his constituents. The opposition called for impeachment. Argentine citizens filed a dozen criminal complaints. A federal prosecutor opened an investigation, with Milei as a target.
Then Milei left for Washington. At the Conservative Political Action Conference last Saturday, he gave a combative speech before President Donald Trump, the other president who promoted a new cryptocurrency this year that soared and then crashed. That coin, $Trump, generated enormous profits for insiders and a cumulative $2 billion in losses for more than 800,000 other investors.
Trump has claimed ignorance. "I don't know if it benefited" me, he said. "I don't know much about it." (The Trump family and its business partners earned nearly $100 million in trading fees alone on the coin.)
Following the ballooning $Libra scandal in Argentina, Milei took a similar approach. He did not earn a cent, he said. Instead, he blamed a small startup in Singapore, KIP Protocol, that few in the crypto industry had heard of.
"You'll notice that the company that organized the launch, KIP, explicitly stated that I had nothing to do with it," he said in a prime time interview last week.
But Milei's story has begun to unravel, showing how crypto and politics have increasingly blended to enrich the powerful and take from most everyone else.
The origins of the $Libra scandal trace back to a conference in Argentina last year, where an American crypto consultant and an Argentine business partner of Milei tried to sell access to the president, according to interviews and documents reviewed by The New York Times. It eventually led to meetings in the presidential offices and a planned partnership with Dave Portnoy, the founder of Barstool Sports.
Since the crash, evidence has emerged contradicting the president's claims; critics in Argentina have accused his inner circle of taking bribes; and the American consultant, whom Milei last month referred to as an adviser, has admitted to amassing $100 million from the scheme.
"This is an insider's game," the American consultant, Hayden Davis, said about crypto coins in a video last week. "This is like an unregulated casino."
'A Little Something-Something'
The crypto world was excited about Milei.
A libertarian economist, he had said he wanted to open his financially scarred nation to new currencies. So when it was announced that he would speak at a crypto conference in Buenos Aires, Argentina, in October, industry leaders descended.
The conference was organized by Mauricio Novelli, a polished 29-year-old stock trader with yearslong connections to Milei.
In 2020, Milei began teaching at Novelli's small investing academy and became the school's pitchman, posting repeatedly about it online, up until he was president. In 2022, he posted about a new crypto project from Novelli, calling it "an economic model that's sustainable over time." Not long after, it collapsed.
At the conference, Novelli was charging sponsors $50,000 for a speaking slot and a meet-and-greet with Milei, according to four attendees who paid the fee.
Yet those people said the meeting with the president turned out to be a quick group photo. To get more time, two of them said, conference organizers told them it would cost more.
"They'd say, 'Hey, you know, give us a little something-something and we can get you a meeting," said Charles Hoskinson, a cryptocurrency billionaire who founded one of the industry's largest platforms, Cardano.
Another attendee said Novelli offered a meeting with the president if the person signed a $500,000 contract for vague "consulting services," according to a copy of the document viewed by the Times.
But Novelli was not the only one selling access to Milei.
Davis -- a 28-year-old with curly blonde hair and garish gold glasses whom Novelli had met at a crypto event in Denver -- was also telling conference attendees that he had "control" over Milei and could broker deals, according to messages viewed by the Times.
"Everything from Milei tweeting" to "all the front-facing Milei stuff basically, showing up at things, et cetera -- I have control over a lot of those levers," Davis said in an audio message to an entrepreneur, obtained by the Times.
"But," he added, "there's a cost." He insinuated that cost could be in the millions of dollars. "I'm not trying to screw anyone over," he said, using an expletive.
Another entrepreneur said Davis made an even more brazen offer in writing: He would deliver a meeting with Milei and a partnership with the Argentine government in exchange for roughly $90 million in cryptocurrencies over 27 months, according to a copy of the proposal viewed by the Times.
There is no evidence that Milei was aware of the proposals. Davis and Novelli, through spokespeople, declined to comment.
Three months before the conference, in July, Novelli and Davis visited Argentina's presidential offices, according to government records obtained by the Argentine newspaper La Nación. The records show their host was the president's sister and chief of staff, Karina Milei.
In November, they visited the presidential offices again. Afterward, Novelli and Davis toasted with Champagne at the Four Seasons in Buenos Aires, telling others they had just signed a deal with the president, according to La Nación.
Then, on Jan. 30, Milei posted a photo of himself and Davis, saying the American "was advising me on the impact and applications of" crypto-related technology.
'The KIP Protocol Project'
Two weeks after that post, a tech entrepreneur in Singapore got an unexpected call from Novelli.
The entrepreneur, Julian Peh, founder of a startup called KIP Protocol, said he had met Novelli at the October conference. Peh was one of the few attendees who actually got a sit-down meeting with Milei. (He said he paid only to sponsor the event.)
But over the next few months, Peh said, he had no contact with the Argentine president or his office. Then Novelli called him on Feb. 13 to pitch him on a new project, he said: the launch of a cryptocurrency called $Libra that would ultimately finance small businesses in Argentina.
Novelli described a plan that involved Davis launching $Libra and Peh's company, KIP, distributing funds to businesses, Peh said.
It was not his company's forte -- KIP built technology related to artificial intelligence. But Peh said he agreed anyway.
A day later, $Libra launched with Milei's tweet. The president linked to a website describing the $Libra project as having "a clear mission: to boost the Argentine economy." At the bottom was a single disclaimer: "Private Initiative project Developed by KIP Network Inc
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