In this news:
Argentina's Javier Milei is under pressure given the cryto-scandal tied to Libra.
Joaquin Temes
This is the first of a two-part series, read the second one here.
The first full blown political crisis of the Javier Milei era in Argentina was sparked by the $Libra crypto-scandal in February. It is still reverberating today, both domestically and scandal hits at the heart of the “iron triangle,” with sister Karina Milei – the president’s chief-of-staff – being directly accused of receiving improper payments, while star political advisor Santiago Caputo immolated himself as he interrupted and sought to “save” Milei from legal ridicule in a scripted interview in the immediate aftermath. Now, investigations are ongoing in Argentina and the United States, and the Chamber of Deputies has formed an investigative committee that promises to keep the political pressure on the Milei administration, which felt it was out of the woods already.
The scandal has cost the government dearly, particularly as the cast of sub-crypto-world characters that put together the scam generate serious questions about the administration’s lack of judgment. At the center of that group is a young United States national named Hayden Mark Davis, who came out of nowhere to structure a neutron bomb that begun to destabilize even the apparently untouchable Milei, who still hasn’t seen his polling figures recover.
Davis is a bizarre character that somewhat resembles the digital version of a Bond villain, apparently unmoved by the level of destruction he leaves in his path. He has admitted his involvement in several seemingly fraudulent token launches, including $LIBRA and even the official $MELANIA token, sponsored by US First Lady Melania Trump, and is connected with suspicious operations regarding Donald Trump’s own token. He’s proven courageous by fleecing hundreds of thousands of crypto investors while using the first lady of the United States and the President of Argentina, but he’s now fallen from grace, forced into hiding with threats hanging over him. As the crypto-world has put its eyes on Davis, its discovered a path of fraud and value destruction that continues to this day, as he continues to move funds associated to his multiple “rugpulls,” indicating he’s still in operation.
The case is scandalous from all angles and while Milei will probably manage to survive (and even thrive) in its aftermath, the reputational damage is done. A sort of “Monica Lewinsky” moment, he would hope. Argentina’s President has defended himself by saying he was just helping to give an extra push to a technology project he thought would benefit the country, but there are little doubts that he and his entourage participated in what ended up being a major scam, in which a very small number of insiders made hundreds of millions of dollars and the vast majority of those who participated suffered terrible losses.
Davis is an expert in memecoin launches, but goes a step further. He has developed the method to effectively front-run the market and generate massive profit via insider trading. Memecoins have become hugely popular in the crypto world lately. They are purely speculative crypto-tokens tied to a celebrity, meme or digital trend, or essentially anything that can be imagined. Through his firm, Kelsier Ventures, Davis and essentially his whole family — father Tom, brother Gideon and fiancée Sydni, sister Scotlyn, and probably others — became experts at launching memecoins and orchestrating what is known as a “rug pull.” Their modus operandi consists of enlisting a major celebrity to attract demand for the token, using automated bots to buy and sell (known as sniping) as it is being released to the public and taking early advantage of a humongous price wave to make millions. This is exactly what they did with Milei and the $LIBRA coin, which effectively demonstrates coordination between the President, his entourage and the teams responsible for the crypto asset launch. Davis didn’t act alone, he counted on technological and financial support from other firms: Meteora — whose co-founder Ben Chow was forced to resign; and KIP Protocol — run by Julian Peh. There could be others.
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