The Crypto-Scandal & the Political Survival of Javier Milei
By Christopher A. Martínez and Carlos Navarrete / Latinoamérica21
HAVANA TIMES – On Friday, February 14, Javier Milei, the eccentric president of Argentina, promoted a new cryptocurrency on his X account (formerly Twitter). The cryptocurrency promised high returns but soon collapsed in a typical “rug pull” scheme, leaving thousands of investors with total losses. It did not matter that Milei deleted the tweet and later retracted his initial promotion. The Peronist opposition quickly moved to request impeachment proceedings to remove him, amid a scenario in which even some of Milei’s own supporters criticized him over the scandal.
Many analysts in Argentina and worldwide are now questioning what impact this scandal will have on the stability of Milei’s government. After all, Milei’s hold on power seemed shaky at the start of his term. Over the months, he has managed to consolidate his position, but the scandal has certainly dealt a heavy blow to his credibility.
The Scandal: Milei Struggles to Stay Afloat
The controversy deepened further when the full version of an interview the president gave to an Argentine media outlet was released, revealing a weak defense. To make matters worse, the creator of the cryptocurrency, Hayden Mark Davis, admitted to having paid a substantial sum of money to Karin Milei, the president’s sister, and even boasted about this connection to persuade investors to put in money. In recent hours, the case has gained even more traction following allegations from businessman Charles Hoskinson, co-founder of Ethereum. According to Argentine newspaper La Nación, Hoskinson disclosed that some of the leaders behind $LIBRA had asked him for money in exchange for arranging a meeting with Milei.
With his characteristic direct style, Milei granted an interview to political scientist and journalist Jonatan Viale. However, the problem lies not only in his statements but also in what happened behind the scenes: one of his advisors requested that part of the conversation be removed before airing. The leak of this request generated even more controversy, exposing an attempt to control the content. Regardless of what was actually cut, the mere suspicion made it impossible for Milei to quickly navigate the crisis.
Milei’s Survival in Office
Political science literature on presidential stability suggests, first and foremost, that having a legislative majority backing the president is a critical factor. This majority allows for smoother governance and significantly reduces the risk of an early exit from office. Secondly, mass protests—especially when they are violent and directly aimed at the president—along with economic recessions, have been shown to be destabilizing factors that greatly increase the likelihood of a premature departure from power.
Given this context, the first thing to consider is that Milei lacks a congressional majority. Moreover, beyond internal conflicts and current difficulties, Peronism—with its deep ties to civil society and strong capacity for mobilizing protests—poses a significant challenge to Milei’s presidency. Without the support of a strong party structure, Milei is vulnerable both to legislative attacks and street protests. The economic situation, for its part, is also not in the Argentine president’s favor.
However, these are not the only obstacles Milei must face.
February 14 and Cryptogate: Another Risk Factor
Until February 13, Milei’s strongest asset for political survival was the fact that he had not been involved in any major scandals. In fact, political science literature identifies presidential scandals as a key factor in explaining the premature end of presidencies. Abdalá Bucaram (Ecuador), Fernando de la Rúa (Argentina), Fernando Lugo (Paraguay), and Pedro Pablo Kuczynski (Peru) are clear examples of “failed” presidents whose administrations were severely impacted by significant scandals.
Such scandals make it difficult for presidents to retain the support of their political allies, leaving them more vulnerable to removal attempts. This is precisely the case for the Argentine president.
Why Is This Not Just Another Scandal for Milei?
The cryptocurrency scandal strikes at the two pillars on which Milei built his candidacy: his criticism of corruption caused by the “political caste” and his supposed expertise in economic and financial matters. If he knowingly promoted a fraudulent scheme like $LIBRA, he has betrayed his promise to fight corruption and expose the “caste.” If, on the other hand, he was deceived, his association with a scam of this magnitude reveals a troubling lack of judgment.
As an economist who boasts about his financial knowledge, it is alarming that he failed to recognize the risks of the investment he endorsed. Whether due to dishonesty or incompetence, Milei has eroded his own credibility and undermined the trust that brought him to power. In a way, Milei inadvertently proved that markets do not regulate themselves—demonstrating in mere minutes that less than 280 characters were enough to destroy the wealth of hundreds of investors.
The opposition has already expressed its intent to initiate impeachment proceedings against the president. However, based on recent history, this is unlikely to be the mechanism that removes Milei from office. In Argentina, the two “failed” presidents of the post-dictatorship era left office due to public pressure and a severe socio-political crisis—not through impeachment. In fact, impeachment is usually pursued against judges, not heads of state.
That said, this does not mean the scandal is inconsequential. Latin American history is filled with presidents whose terms were cut short by scandals that eroded their legitimacy. Bucaram and Kuczynski were quickly forced out after their involvement in scandals was exposed, while in the cases of Lugo and De la Rúa, the scandals gradually weakened their support until another political crisis left them with no way out.
Milei’s case is still unfolding, but the key question is inevitable: Will this scandal trigger a rapid implosion, like Bucaram or Kuczynski, or will it mark the beginning of a slow decline that eventually erodes his power, as happened with De la Rúa and Lugo? The fragility of his coalition and the mounting pressure from the opposition will ultimately determine his fate.
Final Reflections
In light of recent events and Argentina’s political history, it is possible that Milei will manage to weather this crisis. However, his power will be weakened, as it heavily relies on public perception of his ability to manage the country’s economy. His popularity has been built on his handling of inflation, but in a matter of minutes, it became evident that just as he has a formula for reducing inflation, he also has a formula for exposing market vulnerabilities.