$Libra Scandal: Successful or Another Argentinian Scam?
- Francisco Alonso
- Mar 16
- 6 min read
Updated: Mar 18
Editor: Sheila Chen
To fully understand the situation, several key topics need to be broken down. The collapse of $Libra, witnessed by an entire nation on February 14, 2025, marked a turning point in the presidency of Javier Milei’s government. Through the social media platform X, the president announced his plan to finance private SMEs (small and medium-sized enterprises) by encouraging investment in a private cryptocurrency called $Libra. This tweet immediately inflated the currency’s value, causing it to skyrocket to a staggering $4 billion in the global market.
The problem arose soon after the cryptocurrency peaked at $4.56, only to plummet to $0.17 within just five hours. This crash led to approximately 100,000 Argentinians losing their investments in pursuit of higher returns. However, the primary cause of this abrupt decline can be attributed to the typical behavior of what has recently been termed a “memecoin.” These memecoins, created without a solid foundation to justify a stable value, lack the long-term viability of traditional assets and are prone to extreme fluctuations. In contrast, assets like stocks, bonds, or obligations—backed by established financial entities such as international corporations or banks—tend to hold stronger, more stable value over time, making them less risky investments.
The incident opens some doors towards new dilemmas and raises some questions: Should political power embrace a private currency, even if it’s for social purposes? Do memecoins ought to be regulated by monetary institutions, even though they may be considered a cryptocurrency? Or, for example, do cryptocurrencies make a bigger change and do people behave different towards them in low developed countries?
1. Why do Argentinians use cryptocurrencies?
The following bar chart illustrates the number of digital currency owners in Argentina from the years 2017 to 2025.
Beginning in 2017, the number of crypto owners has experienced a massive surge, as reflected in its 2024 growth: rising from 160,000 users to 10.96 million respectively. Its expansion was particularly exponential in 2020, just as the pandemic was beginning, tripling its user base from 1.3 million in 2020 to 3.81 million in 2021. However, this steady growth began to slow in 2024, with projections indicating a nearly stagnant user count for 2025.
Overall, the users that possess cryptocurrencies have launched, to then start growing at a constant rate in 2024 to 2025. However, to fully understand the data presented in this graph, there is some context information that needs to be known.
In Argentina, a country historically ruled by socialist governments which developed strict policies for foreign taxes, corruption in the government, and an unproductive economy has been infested with a stroking inflation since 1975. This has been mainly caused by the dictatorship taking place at that time.
In other words: Since 1975 Argentina's national coin has sinked to the ground. Argentina’s economy has gone from being top 20 in the world in 1950, to top 60 in 2020, also being the second worst economy in South America, just behind Venezuela. There is no stable means of payment for everyday transactions, as the currency’s instability is further compounded by complex bureaucratic obstacles that hinder everything from purchasing a home to starting a business. As a result, trust in the national currency is virtually nonexistent. If people do not rely on their country’s money for long-term savings, what should they do? The answer lies in alternative sources, such as U.S. dollars and cryptocurrencies.
2. The surge of memecoins: How this affects third world countries
The recent triumph of president Trump in the US election has come with plenty of game-changing news for not only the US, but rather the whole world. One event to highlight was the announcement of the launch of his brand new memecoin in the market–$Trump– while running for the electoral campaign. With a starting price of 0.05$, the influence of many factors–being backed up by X, or the lack of initial offer of $Trump coins in the market–made it rise exponentially at a price of 24$, enriching the pioneering investors.
This event, added to the massive diplomatic power of the US, has made it possible to develop a wide network of countries eating out of his hand, in which we find Argentina. J. Milei may have imitated Trump’s action, promoting $Libra in Argentina. What differs the situation in Argentina from the US is the economical instability and lack of acquisition power from the Argentinians in comparison to the US citizens. As stated before, whereas in the US the buying of memecoins is seen as an investment, the purchase of cryptos in Argentina is seen as a substitute of the weak national coin. These cryptos work as a possible substitute for saving money in the long term, so its money doesn't lose acquisition power due to inflation.
Therefore, although both $Trump and $Libra are both cryptocurrencies, their drop in value does not have the same impact. In a wealthy country like the U.S., a significant decline in the value of $Trump would only cause investors to lose a small portion of their money. However, the drop on February 14th of this year caused around 100,000 Argentinians to lose their savings. Why? Because these coins are seen as a more stable alternative to the national currency, leading many people to convert their money into cryptocoins, instead of keeping their money in pesos.
3. Conclusion: The Risks of Speculation
It is not the first time (and of course won't be the last) that public figures like political and socio economic leaders speculate about a certain active. To the reader’s bewilderment, one of the most “headless” speculation phenomenon ever experienced by humanity was the tulips bubble of 1673. During that time, tulips were considered a mesmerizing creation of nature, considered as a reflection of social status, novelty would be in the lookout for the best tulips’ bulbs, increasing its value.
To picture the gravity of the situation: The price of a tulip bulb would surpass the cost of a house in Amsterdam nowadays. And of course, what happened when the speculation bubble exploded? Well, it didn’t have a massive effect on the whole economy, but many investors lost a really big deal of their fortune.
Cryptocurrencies and memecoins are actives like no other: There is no public entity in charge of regulating its commercialization in the market. Whereas cryptocurrencies like Bitcoin have reached basic levels of stability in terms of their value, memecoins and other third-world cryptocurrencies are still in the making, struggling to keep a steady price. Their constant fluctuations are seen by many as an investment opportunity to bet on the short term. However, many people from third world countries, like Argentinians, rely on these digital coins as a way to maintain their acquisition power for their long or medium term savings, due to the stroking inflation that consumes all their money’s value.
I wouldn’t like to conclude with a sharp and definitive conclusion: But I’d rather raise some questions for the future. I lied when I said crypto’s and memecoins do not have a solid bedrock in which they base their value. The soil in which these currencies are built is speculation. And, taking a look at Argentina’s historical background, this country has also been influenced plenty of times by speculative phenomenons. Speculation is a double edged sword: the same way we can benefit from it, it can also doom us. It has affected many people in the course of history, and under no doubt it will still affect people in the future.
That’s why, we ought to remain cautious, ensuring our decisions are not based on speculative arguments. The next time you see an internet guru trying to catch your attention to invest in a certain crypto, or memecoin, try to seek some information by yourself, instead of sticking to the data that person gives you. Doesn’t matter if it's your uncle, an influencer you follow, or the president of your country: the moral of all this is to always remain critical on where you put your money.
References
Espinosa, Catalina, and María Florencia Melo. “Infografía: Crece El Número de Usuarios de Criptomonedas En Argentina.” Statista Daily Data, 20 Feb. 2025, es.statista.com/grafico/33974/numero-de-usuarios-de-criptomonedas-en-argentina/?__sso_cookie_checker=failed.
Iglesia, Facundo. “First Blood: Argentine Government Advisor Investigated in $libra Scandal Resigns.” Buenos Aires Herald, 8 Mar. 2025, buenosairesherald.com/politics/first-blood-argentine-government-advisor-investigated-in-libra-scandal-resigns.
“The $libra Affair: Tracking the Memecoin That Launched a Scandal in Argentina: Trm Insights.” RSS, www.trmlabs.com/post/the-libra-affair-tracking-the-memecoin-that-launched-a-scandal-in-argentina.
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