TLDR
- LIBRA token, endorsed by Argentina’s President Milei, saw its market cap surge to $4.5 billion before crashing 80% within hours, leading to political turmoil and impeachment threats
- Key player Hayden Davis claimed he could “control” Milei through payments to the president’s sister, revealing potential corruption
- The incident triggered broader market effects, causing Solana’s price to fall and leading to the resignation of DeX Meteora co-founder Ben Chow
- FTX has begun repaying $1.2 billion to creditors with claims under $50,000, part of a larger $16 billion repayment plan
- FTX creditor advocate Sunil Kavuri warns victims against gambling returned funds on risky memecoins after missing the recent bull run
The cryptocurrency world faced fresh controversy this week as a memecoin endorsed by Argentine President Javier Milei sparked an international crisis, while former FTX customers began receiving their first repayments after a 27-month wait.
The LIBRA token, launched on February 14 on the Solana blockchain, created a storm of controversy when President Milei appeared to endorse it through a post on social media platform X. The token’s market value rocketed to $4.5 billion within hours of launch, before plummeting more than 80% as insiders sold their holdings.
We just witnessed one of the fastest and largest destructions of wealth in retail trading history.
Argentina’s memecoin, $LIBRA, erased -$4.5 billion of retail capital in 7 hours.
Truly destructive. https://t.co/oRg6aZwRgB pic.twitter.com/DZCNExDypQ
— The Kobeissi Letter (@KobeissiLetter) February 15, 2025
The rapid collapse led to estimated losses of $4.5 billion in retail capital within just seven hours. Currently, the token’s market value has dropped to approximately half a million dollars, according to CoinMarketCap data.
The situation took a serious turn when President Milei deleted his endorsement post and claimed ignorance of the project’s details, accusing political opponents of mischief. This led to calls for his impeachment from opposition parties and caused the Argentine stock market to fall nearly 6% following news of an investigation.
The controversy deepened on February 18 when CoinDesk revealed text messages from Hayden Davis, a key figure behind the LIBRA token, claiming he could “control” Milei through payments made to the president’s sister, Karina Milei, who holds a powerful position in the government.
Several high-profile individuals were linked to the project, including Barstool’s Dave Portnoy, who admitted to being an early investor but said he received a refund. Hayden Davis, who was also behind the MELANIA memecoin, defended the project, stating it was “not a rug pull” but rather “a plan gone miserably wrong.”
The fallout led to the resignation of Ben Chow, co-founder of DeX Meteora where LIBRA was launched. Chow also held a position as co-founder of Solana-based trading aggregator Jupiter.
The incident affected the broader crypto market, with Solana’s native token SOL experiencing a price decline. Other memecoins, including TRUMP and MELANIA, also saw rapid selling in the aftermath.
FTX Repayments Begin
Meanwhile, the cryptocurrency industry saw a separate development as FTX’s bankruptcy estate began distributing its first round of repayments. The estate released $1.2 billion to customers with claims under $50,000, marking the start of a larger repayment program that could total more than $16 billion.
Sunil Kavuri, a self-described “champion” for FTX creditors who lost $2 million in the exchange’s collapse, warned newly repaid customers against risky investments in memecoins. He emphasized the importance of careful wealth management after the long wait for repayments.
Today FTX Repayments: Claims <$50k
1st Distribution: 18 Feb 2025, 10am ETClaims < $50k: $1.2bn (120.5%)
~ $800m out of $1.2bn to be paid
~ 162k out of 460k est. allowed claimsApprox.
50% Original Holders: $400m
50% Claim buyers: $400m— Sunil (FTX Creditor Champion) (@sunil_trades) February 18, 2025
The FTX repayment process is being facilitated through crypto exchange Kraken and custodian services provider BitGo. Nearly half of the claims set for repayment had been purchased by investment firms, with some buying claims for as little as 10 cents on the dollar.
The distribution marks a turning point for FTX customers who have waited since November 2022, when the exchange’s collapse shocked the crypto market. The case led to the conviction of former CEO Sam Bankman-Fried on seven counts of fraud, money laundering, and conspiracy, resulting in a 25-year prison sentence.
Additional distributions to larger claim holders are planned for future dates, as the bankruptcy estate manages more than $16 billion in assets. The process aims to ensure proper verification and orderly distribution of funds to affected users.
Chris Chung, founder of Solana-based swap platform Titan, expressed concern about the impact of the LIBRA incident on the cryptocurrency space, stating, “If we want to attract new retail users, this is not the way to do it.”
The LIBRA token incident has prompted calls from within the cryptocurrency community for improved self-regulation and user protection measures. The combination of political controversy and financial losses has highlighted the risks associated with unregulated crypto trading.
