Crypto Market Overview: Community in Shock Over Argentina's LIBRA Meme Coin, Saylor Visits El Salvador

On Friday, a political and financial storm rose around the crypto-friendly president of Argentina Javier Milei after he shilled a newly launched meme coin LIBRA on his X account. His endorsement quickly sent ripples through the crypto market, making the meme coin’s value skyrocket almost instantly to $5 apiece. It also reached a peak of $4.5 billion in market capitalization.

LIBRA Coin Rugpull

However, a few hours after that, the coin left thousands of retail holders in massive losses. Insiders managed to cash out roughly $107 million in profits, according to Lookonchain, which caused the coin to crash. Analysts from the Bubblemaps firm stated that 83% of LIBRA were held in quite a small cluster of wallets. 

This pattern was a classic “pump-and-dump” scheme frequently seen in the meme coin space, when insiders or even the team of the makers sell the largest part of their coins once the price surges, leaving retail holders in losses.

Besides, the speed at which the whole thing happened and those insider wallets’ trades were executed raised suspicions of an intended fraud, also leading to questions as to Milei’s close administration was involved in this crypto scam.

Milei quickly removed the pinned X post in which he endorsed the coin and distanced himself from it, denying any ties to its makers.

Critics Call for Argentina President’s Impeachment

After deleting the X post about LIBRA, the president who generally favors cryptocurrencies, he claimed that he did not have the full information about LIBRA and his promotion was based on incomplete data. However, his explanation hardly helped to save the situation. This situation quickly triggered an indignant reaction from the crypto community. 

Besides, this situation sparked serious political consequences for Javier Milei as he now faces negative consequences – this LIBRA promotion grabbed the attention of the opposition in Argentina’s Congress, led by Leandro Santoro and he is now calling for Milei’s potential role in this misconduct to be investigated.

Some lawmakers are even calling for his impeachment should a direct connection between the president and LIBRA be established.

Besides, the LIBRA scandal has triggered debates about the lack of regulation in the crypto market, especially when it comes to meme coins. While the US Securities and Exchange Commission (SEC) has officially recognized top cryptos Bitcoin and Ethereum to be legitimate financial tools and commodities, it cannot be said about meme coins.

The latter remain highly speculative assets with hardly any oversight. Some steps are currently being taken to remedy that, though as Grayscale has submitted a filing for registering a Dogecoin ETF and last week the SEC acknowledged that filing, along with the one submitted for an XRP ETF.

Still, critics have been arguing that if politicians are allowed to promote highly volatile meme coins without any aftermath, that would set a dangerous precedent. Before LIBRA, US president Donald Trump and his wife Melania issued meme coins and MELANIA but those coins continue to trade without any incidents or frauds from insiders.

Arthur Hayes and CZ Weigh In on Meme Coins

The founder and former CEO of the BitMEX cryptocurrency exchange Arthur Hayes has stepped forward with a bold statement, predicting that in the near future meme coins are likely to become a powerful tool that politicians will use to engage with potential voters. Thus, he predicted a powerful rise of PolitiFi – coins issued and used by politicians. The very first coin was a meme token named after Donald Trump in 2018 by his loyal supporters.

Hayes stated that the rise of meme coins in political circles is rather a dangerous trend and that politicians might not only engage with their audiences through meme assets but also generate personal wealth using them. He believes that in the future meme coins could be used to transfer money in and out of political campaigns and, perhaps, go as far as laundering money through them pretending those coins to be community-driven projects.

Meanwhile, last week, another big figure in the crypto space, namely the co-founder and former CEO of the Binance exchange, Changpeng Zhao (CZ), showed an indirect involvement in meme coin creation. The BNB community has launched a meme coin inspired by CZ’s dog and it quickly gained traction among Binance and CZ’s supporters. However, Zhao remained neutral, neither endorsing, nor criticizing the coin. He admitted that he would never launch a meme coin himself over lack of experience in this field.

Michael Saylor visits El Salvador

In a separate development, last week Strategy (formerly MicroStrategy) founder Michael Saylor paid a visit to the Bitcoin state of El Salvador and met with its president Nayib Bukele.

In 2021, El Salvador was the very first country to legalize Bitcoin, making it an official means of exchange. The country began to accumulate BTC, capitalizing on its price growth. Besides, the country is mining Bitcoin using volcano energy. Last year, the USDT stablecoin issuer Tether moved its headquarters to El Salvador. Famous Bitcoin maximalist Max Keiser is Nayib Bukele’s Bitcoin advisor who also moved there with his family.

Saylor and Bukele discussed how the country could benefit further from the global Bitcoin adoption in the future. Some sources say that they also discussed Nayib Bukele’s project called the Bitcoin City which is planned to be erected at the base of the Conchagua volcano and would be funded with  so-called “Volcano Bonds” and the proceeds of Bitcoin mining using geothermal energy. As Bitcoin adoption grows, traders can capitalize on its potential with secure and intuitive trading on Margex.