The Argentine government has been in damage control since Friday evening when President Javier Milei published and later deleted a post on X advertising the launch of a cryptocurrency known as $LIBRA. Now, after the memecoin’s collapse cost investors hundreds of millions of dollars, the president’s sister, Karina, who serves as general secretary in the administration, has been directly implicated in the scandal known as criptogate.

According to reports from La Nacion and the publication CoinDesk, which specializes in digital currencies, $LIBRA co-creator and Kelsier Ventures CEO Hayden Davis bragged that he had the Argentine president in his pocket because he was funneling money to his sister. “I control that n****,” Davis wrote in texts reviewed by the two outlets. “I send $$ to his sister and he signs whatever I say and does whatever I want.”

Neither outlet has confirmed whether money was exchanged in advance of the digital coin’s launch.

At approximately 7 p.m. on February 14, President Milei took to X and backed a cryptocurrency known as $LIBRA, which was linked to a private project called Viva La Libertad (Long Live Freedom). He claimed that it was “growing,” and the project would allow investors to fortify the Argentine economy by funding small businesses. The post also contained what is known as a “contract number” that allows would-be buyers to find the cryptocurrency, which was not listed on major trading platforms. 

Within the hour, the value of the token had soared to US$5.54, with buyers and sellers moving US$1.5 billion as $LIBRA’s market capitalization reached US$4.5 billion.

Then the sell-off began. In a matter of minutes, the coin’s value cratered from US$4.74 to US$1.44. When the dust finally settled, approximately 75% of $LIBRA investors lost money, while 0.18% made in excess of US$100,000. During an interview with Stephen Findeisen, a prominent YouTuber who posts under the name Coffeezilla, Davis claims to have earned US$100 million, plus an additional $13 million in fees from selling the coin. In cryptocurrency circles, this is known as a “rug pull.”

“If the [transactions described in the chats] happened, then they constitute a violation of Article 256 of the Argentine penal code, which pertains to passive bribery,” former general prosecutor Maximiliano Rusconi told the Herald. “This carries a penalty of one to six years in prison.”

“Then there’s Article 265, which regulates negotiations that are incompatible for public officials,” he continued. “In this case, Milei has used his office to conduct private business. But with or without this alleged payment, it’s possible the president has provided indispensable collaboration with the principal authors of this fraud.”

President Milei is already facing multiple lawsuits and calls for his impeachment from the opposing Union por la Patria coalition and different sectors of Argentine civil society.

Editor’s note: Since the publication of this story, a spokesperson for Davis has issued a statement claiming that he has no memory of sending the text messages in question. The statement added that “Recent media reports claiming I paid President Javier Milei or his sister, Karina Milei, to launch the Libra memecoin are completely false. I never made any payments to them, nor did I request any. Their only concern was ensuring that proceeds from Libra would benefit Argentina’s people and economy.”