Argentina: Presidential aspirant sued over digital asset Ponzi scheme promotion

Javier Milei, a current member of Congress and a contestant in Argentina’s 2023 presidential elections, is being sued by a group of disgruntled investors over his alleged role in their investment in a now-defunct alleged digital asset Ponzi scheme, CoinX.

Local news outlet Clarin reports that the group, comprised of around 20 investors, argues that the politicians’ promotion of the platform on social media influenced their investment choice. As stated in the complaint filed by lawyer Juan Pablo Chiesa, the alleged victims are seeking damages for their collective losses of between Arg$30 million to Arg$40 million (nearly US$300,000).

The allegations point to a post that Milie made on Instagram in December 2021, wherein he stated that CoinX was “revolutionizing” the way for Argentinians to escape inflation. The platform launched at the time promising up to 8% monthly returns in dollars, Argentine pesos, or digital assets.

CoinX claimed to earn this return by trading mutual funds using market-beating artificial intelligence, trading bots, and a team of professional traders. However, the platform stopped paying out gains back in March and was declared an unregistered securities operator in June by Argentina’s market regulator, the National Securities Commission (CNV).

In the case, the group claims that Milei’s standing as a prominent economist makes him a reference to the topic he promotes and asks him to take responsibility for their losses. But the libertarian economist has long distanced himself from the platform.

Milei released a statement, saying that he was not paid to make a social media post and that he does not consider the firm a Ponzi scheme from his findings about their business. He insisted that the company shut down only because of the digital assets market downturn.

Milei’s digital assets-friendly manifesto gaining traction in Argentina

Despite the lawsuit, the congressman remains one of the top three contenders to win the October 2023 presidential pool. According to a Washington Post report, the candidate’s criticisms of the current government’s financial policy that has led the country to double-digit inflation have resonated strongly with a significant portion of the population.

The 51-year-old official has described the central bank as a scam that is stealing from the citizens. He has also encouraged the adoption of private currencies like Bitcoin to help fight inflation.

This comes at the back of the rising popularity of digital assets, which regulators have expressed concern over. Similarly, the country is also under pressure from the International Monetary Fund to discourage the burgeoning digital assets market as part of its conditions to provide financial aid to the Argentinian economy.

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