Milei’s memecoin mishap could ricochet back on White House

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The trend of elected officials issuing memecoins for fun and profit may come to a screeching halt, thanks to a growing Argentine scandal whose roots might extend all the way to 1600 Pennsylvania Avenue.

• Donald’s airdrop outshined by Milei’s rug pull
• LIBRA’s schemers fail to cover their tracks
• Blame game begins
• No justice, no peace… or no biggie?
• SEC task force taking crypto meetings
• SEC acquiescence not enough for Musk’s DOGE

On February 17, the website responsible for selling Donald and Melania Trump’s Solana-based memecoins announced a ‘President Trump Day Celebration’ in an apparent conflation of the current president with the Presidents Day national holiday.

The notice promised a free airdrop of three $TRUMP tokens to anyone who’d purchased an “official Trump product”—specifically, his sneakers, watches, colognes, or non-fungible token (NFT) collections—prior to February 15. Eligible claimants have until March 1 to receive their free tokens, which will be delivered via the blockchain platform Crossmint.

The notice helpfully warns visitors to “Be Careful of SCAMS,” for which we don’t have any joke to make because it’s just too damn easy.

If the intention of this airdrop was to spark renewed interest in $TRUMP, it didn’t work, as the token’s fiat value fell from $18 to $16 on Monday and has yet to bounce back.

It probably didn’t help that the team behind Melania’s memecoin appears to have also been involved in the ill-fated launch and abrupt rug pull of a token promoted by Argentina’s crypto-friendly President Javier Milei (whom Trump has called “my favorite president”).

If you missed last weekend’s drama, on February 14, Milei tweeted a promo for a new Solana-based project called Viva la Libertad, based on the ‘Long live Freedom’ slogan that Milei uses to conclude his speeches. Naturally, the project had a memecoin (LIBRA), and Milei’s tweet offered directions on how to buy the token. The proceeds from token sales would allegedly encourage “economic growth by funding small businesses and startups.”

Predictably, it appears to have been a scam from the start, as insiders were quick to dump over $100 million worth of LIBRA as its market cap briefly topped $4 billion. Belatedly realizing that the rug was being pulled, non-insiders rushed to dump their own tokens, further cratering LIBRA’s price and causing major losses for anyone not in on the scam from the start.

That latter category includes Milei, at least, according to Milei. Five hours after his original tweet, Milei deleted it and then tweeted a mea culpa (of sorts), insisting that he “was not informed of the fine details of the project and after learning, I decided not to continue spreading it.”

Milei’s critics were quick to reject this explanation, noting that this wasn’t Milei’s first connection to a crypto scam. In 2022, the then-member of Congress was sued by a group of investors who’d been taken by an alleged crypto Ponzi scheme called CoinX that Milei had promoted via his Instagram account the previous year.

This time around, Milei appears even less apologetic, telling local media that few Argentines had been victimized by the rug pull, since the majority of buyers were Chinese and American (it’s unclear how he knows this). Milei further claimed those who bought LIBRA “knew what they were getting into. As volatility traders, they understood the risks involved.”

But Milei subsequently retweeted his original tweet, which caused LIBRA to briefly spike anew, only to delete that retweet as several other suspected insider wallets dumped their bags at a profit. Worse, Milei’s ‘live’ TV interview that was intended to clear the air appears to have been prerecorded and heavily edited to approve all questions and expunge any incriminating answers.

While Milei is clearly hoping the whole brouhaha goes away soon, Argentina’s Anti-Corruption Office has opened a probe into the affair. On Monday, Judge Maria Servini of the Federal Court No. 1 in Buenos Aires was selected to handle claims of fraud by those who lost money via this debacle.

Was that wrong? Should I not have done that?

While Milei does damage control at home, LIBRA’s founders—in particular Hayden Davis of deployer/market-maker Kelsier Ventures—have been bragging about their exploits. And this could create blowback for the $TRUMP/$MELANIA tokens.

In text messages sent last December, Davis reportedly claimed to be able to “control” Milei due to payments he was making to the president’s sister, Karina. “I send $$ to his sister and he signs whatever I say and does what I want.” Davis also reportedly bragged about his ability to get Milei to promote projects via social media.

In an X post on February 15, Milei’s presidential channel confirmed that Milei had a meeting last October with representatives of KIP Protocol, the team behind the ‘Libertad’ project, while Milei said he met Davis on January 30 at local government offices. However, the post said Davis “had no and does not have any connection with the Argentine government and was presented by the KIP Protocol representatives as one of their partners in the project.”

Speaking to Stephen ‘Coffeezilla’ Findeisen on Monday, Davis claimed that LIBRA was more of a failure than a scam, while suggesting that the only people that get mad following a memecoin rug pull “are the people that aren’t insiders.”

In response to Findeisen’s questions regarding the ethics of insiders preying on retail buyers, Davis struck a defensive and tone-deaf tone, asking: “So what do you do then? You don’t launch the project? How do you make money then?” (Somewhere, Davis’s lawyer is screaming at him to STFU already.)

Kelsier was reportedly prepping the launch of a similar state-endorsed token in Nigeria, with confidantes of that nation’s president said to be in discussions with the now discredited market-makers. Other nations may have similarly dodged disaster via LIBRA’s public downfall.

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Don’t rush; there’s plenty of blame to go around

The same digital wallets that ‘sniped’ the LIBRA project, earning tens of millions in the process, appear connected to the wallets that performed similar insider trading activities during the $MELANIA token launch. $MELANIA also soared and crashed within hours of its launch and currently sits around 99% off its peak price.

The digital trail suggests that LIBRA and $MELANIA were founded/funded by some of the same wallets. Numerous other scam token projects have been connected to these wallets.

On February 16, the X account of the Jupiter decentralized exchange (DEX), which listed LIBRA, posted that “a few members” of its team knew about the launch two weeks in advance. The post claimed Jupiter was “completely unaware of the dealings between the the [sic] principals, in this case Milei and the market makers” but “it was an open secret in memecoin circles that an ‘Argentina Coin’ was going to launch at some point.”

On February 17, Ben Chow, co-founder of the Solana-based Meteora platform that hosted liquidity pools for both the $TRUMP and $MELANIA token launches, resigned his position as the insider trading allegations mounted. Chow previously denied any wrongdoing on behalf of himself or Meteora, claiming that Meteora was a “permissionless” platform and no one at Meteora “had any access to the tokens or to Milei.”

Later that same day, Meteora’s other co-founder, the pseudonymous ‘Meow’ (also owner of Jupiter), tweeted his own belief that “no one at Jupiter or Meteora committed any insider trading or financial wrongdoing, or received any tokens inappropriately.” Meow claimed to be “100% confident about Ben’s character” but expressed regret regarding Chow’s “lack of judgment and care about some of the core aspects of the [Libra] project.”

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What now?

All eyes are now on how far up this memecoin food chain the scandal might go. While Milei might yet escape legal liability, his reputation as an economic wizard keeping an eye out for the common man/woman has taken a significant hit. Interestingly, Milei was already booked to meet with Trump in Washington this week. Oh, to be a fly on that wall.

As for whether this still unfolding scandal might damage Trump’s reputation with the hordes of crypto newbies who snatched up $TRUMP/$MELANIA and are now counting their losses, that depends. Does Davis have similar ‘I own this beeyotch’ texts with member of the $TRUMP/$MELANIA teams, perhaps even one of Trump’s sons?

As for the reputation of the overall ‘crypto’ sector, we’re afraid that ship sailed a long time ago. But that didn’t stop the pseudonymous founder of Pump.fun—the memecoin-in-a-minute token generator that has flooded both Solana and Base (the Ethereum ‘layer 2’ project by the Coinbase (NASDAQ: COIN) digital asset exchange) with literally millions of utility-free sh*tcoins—from suggesting that the platform may require “guardrails” going forward. (Stable, door, horses, something.)

Of course, given that America’s regulatory agencies have effectively signaled their utter disinterest in policing ‘crypto’ to any significant degree, the perpetrators behind this scandal may never face legal repercussions. As a Bitwise exec observed on Monday: “immoral is not always illegal. But stupidity is legal.”

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SEC 2.0 not wasting time

Back in the states, the Securities and Exchange Commission (SEC) did as expected by requesting a pause in its legal action against Coinbase. On February 14, the SEC asked the U.S. Court of Appeals for the Second Circuit for a 28-day extension on deciding whether to appeal a court ruling that allows Coinbase to appeal its failed motion to dismiss the charges.

This is the latest step in the SEC’s eagerness to distance itself from the crypto litigation launched under former Chair Gary Gensler. The SEC’s new management has requested similar pauses in multiple crypto-related suits, including its suit against Coinbase rival Binance, a suit many observers felt would be a slam dunk victory for the regulator given the evidence.

Commenting on the Coinbase pause request, former SEC enforcement director John Reed Stark said: “Stick a fork in the SEC’s case against Coinbase, it’s done.” Taken together with the other pause requests, Stark said “the SEC crypto-enforcement is as dead as Julius Caesar. RIP.”

The SEC’s incoming Chair, Paul Atkins, has yet to be confirmed by the Senate but the SEC’s new Crypto Task Force isn’t letting the grass grow under its feet. As pledged, it has begun meeting with crypto advocates, including a February 4 talk with representatives of the Blockchain Association, who brought along a list of “proposed priorities” that the SEC, you know, might wish to adopt.

We’ll spare you the blow-by-blow, but it’s about what you’d expect. Lift the guardrails, immunize participants against future enforcement actions, and declare that the last four years officially never happened.

A February 5 meeting saw representatives of Jito Labs and Multicoin Capital Management discuss all the wonderful ways in which staking tokens that otherwise have no purpose can most effectively crash a G7 economy.

That same day, the SEC met with AH Capital Management, an offshoot of the Andreessen Horowitz (a16z) crypto-focused venture capital group. On the agenda was loosening restraints on, well, everything, in a manner that “reflects the distinct characteristics of crypto assets.” Also, decentralization is awesome, as it means there’s nobody to charge with any crimes, so everything’s decentralized, okay?

Picking up where a16z left off, the good folks at Nasdaq Inc. stopped by the following day to discuss the need for any regulatory revamp “to account for certain unique characteristics of digital assets securities.” However, Nasdaq wants the SEC to “ensure that the mere act of tokenizing a security does not subject that security to lesser regulation, lest the new digital assets regime will [sic] inadvertently swallow the existing regime for regulating analog securities.”

Also taking tea with the SEC was Colin D. Lloyd, a former attorney at the crypto-friendly firm of Sullivan & Cromwell (of FTX fame), who insisted he wasn’t there repping any one client. Lloyd simply wanted to educate the SEC on the finer points of blockchain technology. Bless his heart.

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The Wrath of Elon

Meanwhile,  Elon Musk’s Department of Government Efficiency (DOGE) has turned its cost-cutting/fraud-fighting/gaslighting eye on the SEC. Having already laid waste to any number of federal agencies, some DOGE minions asked for public help on “insights on finding and fixing waste, fraud and abuse relating to” the SEC.

Coinbase’s chief legal officer Paul Grewal was quick to respond, helpfully suggesting the SEC “adopt a rule that defendants who defeat @SECGov lawsuits get all their attorney fees and costs from the Commission budget.” (Coinbase doled out $913 million in stock-based compensation to its execs last year, so a legal fee refund would likely goose Grewal’s 2025 take-home.)

Several crypto fans suggested Musk force the SEC to take pity on poor HEX founder/scammer Richard Heart, who is currently on the run from not only the SEC’s fraud charges but also Finnish assault charges.

Others suggested Musk probe the timing of the SEC’s civil suit against XRP-issuer Ripple Labs on the last day of the pre-Gensler administration (the popular theory is that then-SEC chair Jay Clayton was an Ethereum fan and targeted XRP to ensure Ethereum’s success).

It’s worth remembering that, unlike DOGE’s war on federal programs like Social Security or Medicaid, Musk’s beef with the SEC is personal. In 2018, Musk tweeted a false claim that he’d secured funding to take his Tesla firm private, prompting the SEC to sue him for misleading investors. Musk settled but locked horns with the regulator several times over the next few years over equally impulsive public pronouncements.

On Gensler’s final day in office last month, the SEC sued Musk for violating securities law by failing to disclose his growing stake in Twitter/X before his acquisition offer. Musk called the suit “lawfare” and is clearly itching to exact his revenge on the regulator, regardless of who’s now calling the shots.

Actually, it’s Trump calling the shots, as he issued a new executive order on Tuesday that effectively gives him control of all federal agencies. The people pretending to run these ‘independent’ agencies—the order includes the SEC by name—will now have to submit draft regulations for him to review/approve and consult with him regarding their “priorities and strategic plans.”

It’s a bold power-grab that will almost certainly be challenged in the courts. But it’s clear that Trump intends all regulatory oversight—including that of digital assets—to be subject to his approval. Good thing we’re already one whole month into his four-year term, huh?

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