Argentina’s federal judiciary has definitively dismissed the criminal case surrounding the LIBRA cryptocurrency scandal, absolving President Javier Milei, his sister Karina Milei, and eight other individuals, including U.S. businessman Hayden Davis, of charges related to fraud, influence peddling, abuse of authority, and conflicts of interest. The 60-page ruling, issued by Federal Judge Marcelo Martínez de Giorgi on October 23, 2026, concluded a comprehensive inquiry that commenced in February 2025, finding insufficient evidence to establish the legal elements of the alleged offenses.
The Genesis of the LIBRA Scandal and Milei’s Involvement
The LIBRA scandal first erupted following the launch of a new cryptocurrency token, promoted by then-presidential candidate Javier Milei on his prominent X (formerly Twitter) account. Milei, a self-proclaimed anarcho-capitalist and ardent proponent of free markets and cryptocurrency adoption, framed LIBRA as a potential boon for Argentine businesses and a step towards financial innovation in a nation grappling with persistent economic instability and high inflation. His endorsement, coming from a figure rapidly gaining political traction, lent significant credibility and visibility to the project.
Initially, the token experienced a brief surge in value, fueled by the hype generated by Milei’s public backing. However, this rally proved short-lived, with LIBRA’s price subsequently crashing dramatically, leading to substantial losses for numerous investors. Following the crash, Milei reportedly removed his promotional post from X, a move that only intensified public scrutiny and accusations of potential misconduct. While precise loss estimates vary, some reports suggest that investors collectively lost upwards of $200 million, a staggering sum that underscored the scale of the alleged fraud.
The case garnered significant national and international attention, largely due to Milei’s high-profile status as President of Argentina at the time the investigation unfolded. The allegations touched upon the sensitive intersection of public office, personal endorsements, and the nascent, often volatile, cryptocurrency market. For many, it represented a critical test of accountability for political figures engaging with emerging financial technologies.
Judicial Scrutiny and the Rationale for Dismissal
The criminal investigation delved into various aspects, including claims that the LIBRA project constituted a fraudulent scheme, that government officials engaged in influence peddling, abused their authority, and had conflicts of interest by promoting a private venture. However, Federal Judge Martínez de Giorgi ultimately sided with prosecutor Eduardo Taiano’s recommendation for dismissal, concluding that the factual evidence did not meet the stringent legal requirements for criminal conviction on any of these counts.
Central to the court’s decision was the finding that a mere decline in a token’s price or investor losses, in isolation, does not automatically constitute criminal fraud. The ruling emphasized the lack of an "identified false statement that directly persuaded buyers to acquire LIBRA." The judge clarified that the public attention generated by a prominent promoter, such as a presidential candidate, does not, by itself, equate to a deceptive scheme. Crucially, investigators failed to demonstrate "induced error" and "direct financial harm arising from such a deception," which are fundamental elements for proving criminal fraud.
Regarding President Milei’s involvement, the court acknowledged that his political office undoubtedly provided the LIBRA launch with "added visibility." Nevertheless, the ruling stated that "institutional influence, by itself, was not evidence of fraud." Investigators could not establish that Milei’s X post was an official governmental act or that state resources were utilized for the promotion. The court found no record of an administrative order or a government contract directly linking the promotion to state machinery. This distinction was critical in separating a public figure’s personal endorsement from an official misuse of power.
The dismissal also extended to Karina Milei, the President’s influential Secretary General. Investigators had examined unsigned files recovered from the phone of Mauricio Novelli, another defendant. However, these materials did not definitively prove that Karina Milei received payment for arranging meetings with the president or that a "remunerated arrangement" or "influence peddling" had occurred.
U.S. businessman Hayden Davis, who described himself as a launch adviser for LIBRA and consistently denied wrongdoing, was also absolved. The judge found insufficient evidence of criminal coordination between Davis and government officials. The dismissal further covered Mauricio Novelli, Manuel Terrones Godoy, Sergio Morales, Julian Peh, María Alicia Rafaele, María Pía Novelli, Camilo Rodríguez Blanco, and Orlando Mellino, effectively closing the case file for all named individuals.
A Detailed Chronology of the LIBRA Scandal
The timeline of the LIBRA scandal and its subsequent legal proceedings highlights the rapid unfolding of events and the extended period of investigation:
- Pre-February 2025: The LIBRA cryptocurrency project is conceived and launched. Javier Milei, then a prominent presidential candidate, promotes the token on his X account, framing it as a supporter of Argentine businesses. The token experiences a brief rally followed by a significant crash. Milei subsequently removes his promotional post.
- February 2025: Amidst growing public outrage and mounting investor losses, a criminal inquiry into the LIBRA scandal officially commences in Argentina. Federal prosecutors begin examining allegations of fraud, influence peddling, abuse of authority, and conflicts of interest.
- Early to Mid-2025: Investigations intensify, involving attempts to trace digital assets and obtain records from cryptocurrency platforms. Authorities face challenges in securing complete information and in determining the content of certain communications, such as calls between Milei and Novelli near the launch period.
- Throughout 2025 and 2026: The case draws significant scrutiny due to President Milei’s involvement. Opposition lawmakers and affected investors call for thorough investigations and formal questioning of the defendants.
- September 2026: A separate class-action lawsuit filed in a New York federal court, involving Kelsier, Hayden Davis, former Meteora CEO Benjamin Chow, and Meteora, is dismissed. This dismissal occurs on both procedural and substantive grounds, indicating the complexity of establishing liability in multi-jurisdictional crypto cases.
- October 23, 2026: Federal Judge Marcelo Martínez de Giorgi issues his 60-page ruling, formally dismissing the criminal case against President Javier Milei, Karina Milei, Hayden Davis, and eight others. The decision follows prosecutor Eduardo Taiano’s request for dismissal due to insufficient evidence.
- October 24, 2026: News of the dismissal spreads, with reports citing sources like Reuters confirming the federal judge’s decision.
- Post-October 2026: While the criminal case is closed, challenges concerning the removal of private complainants from the Argentine proceedings remain before the Federal Criminal Cassation Court. This dispute focuses on the participation rights of affected investors, rather than directly seeking a reversal of the dismissal itself.
Political and Public Reaction to the Ruling
The dismissal of the LIBRA scandal case triggered immediate and sharply divided reactions across Argentina’s political spectrum. The presidential office swiftly hailed the ruling as unequivocal "proof of Milei’s innocence," portraying it as a vindication of the President and his administration. President Milei himself echoed this sentiment, publicly describing the entire case as a "political and media operation" orchestrated by his adversaries, designed to undermine his government and tarnish his reputation. This narrative aligned with his broader political rhetoric, often characterized by claims of facing systemic opposition from established interests.
Conversely, opposition lawmakers vehemently challenged the court’s decision, expressing deep dissatisfaction and raising serious questions about the thoroughness of the investigation. Deputy Maximiliano Ferraro, a vocal critic, notably "criticized the failure to call the defendants for formal questioning," arguing that such a crucial procedural step was omitted, potentially leaving key aspects of the case unexplored. Ferraro also highlighted that "investigators did not complete measures sought by affected investors," implying that the victims’ pursuit of justice was not fully addressed by the judicial process. These criticisms underscored a perception among the opposition that the investigation might have been curtailed or incomplete, especially given the high-profile nature of the defendants.
For the countless individuals who invested in LIBRA and suffered significant financial losses, the ruling likely brought a mix of frustration and disappointment. While the court’s decision focused solely on criminal liability and did not award compensation to token buyers, nor did it determine a final investor-loss figure, the absence of a criminal conviction against the project’s promoters could be seen as a setback for those seeking redress. The ongoing challenges before the Federal Criminal Cassation Court regarding the participation of private complainants reflect the lingering desire among affected parties to have their voices heard and their claims fully investigated, even if the criminal prosecution has concluded.
Broader Implications for Argentina’s Crypto Landscape and Investor Protection
The LIBRA scandal and its ultimate dismissal carry significant implications for Argentina’s burgeoning cryptocurrency landscape, investor protection, and the intersection of digital assets with political power.
Firstly, the case highlights the inherent challenges in regulating and prosecuting fraud within the rapidly evolving crypto sector. The court’s meticulous definition of "criminal fraud," requiring clear evidence of false statements, induced error, and direct financial harm, underscores the difficulty of applying traditional legal frameworks to decentralized and often anonymous digital asset markets. The inability of investigators to trace certain digital assets or obtain comprehensive records from cryptocurrency platforms, as noted in earlier reporting, further illustrates the technical and jurisdictional hurdles faced by law enforcement in such cases.
Secondly, the incident could prompt renewed calls for clearer and more robust cryptocurrency regulations in Argentina. While President Milei’s government has generally adopted a pro-crypto stance, even suggesting the use of Bitcoin for contracts, the LIBRA scandal demonstrates the potential for abuse and significant investor harm in an under-regulated environment. Lawmakers and consumer protection advocates may push for frameworks that enhance transparency, impose stricter disclosure requirements on promoters, and provide clearer avenues for investor recourse in cases of alleged fraud. This could lead to a delicate balancing act for the Milei administration, between fostering innovation and ensuring adequate consumer safeguards.
Thirdly, the dismissal, while a legal victory for the defendants, may not fully restore public confidence in political figures endorsing private financial ventures, especially in volatile markets. The perception of a blurred line between official endorsement and personal promotion could persist, potentially leading to increased public skepticism about government-backed or politically promoted investment opportunities. For crypto investors, the case serves as a stark reminder of the "caveat emptor" principle, emphasizing the need for thorough due diligence independent of any celebrity or political endorsement.
Finally, the multi-jurisdictional nature of the LIBRA scandal, with a separate class action dismissed in New York, underscores the global complexity of crypto fraud. Such cases often involve entities and individuals operating across borders, complicating investigations, asset recovery, and the enforcement of judgments. The Argentine decision, while specific to its legal system, contributes to a growing body of international jurisprudence grappling with how to effectively address illicit activities in the decentralized digital realm.
Conclusion: Legal Closure Amidst Lingering Questions
The dismissal of the criminal case in Argentina marks a significant legal closure to the LIBRA scandal for President Javier Milei and the other accused individuals. The court’s ruling, based on a rigorous assessment of the evidence against the legal elements of criminal offenses, found no basis for prosecution on charges of fraud, influence peddling, or abuse of authority. This decision provides a clear legal vindication for the defendants, reinforcing the principle that public visibility or investor losses alone do not automatically equate to criminal liability.
However, the legal closure does not fully dissipate the controversy surrounding the LIBRA project. The substantial financial losses incurred by investors, the sharp political divisions over the investigation’s thoroughness, and the ongoing challenges regarding complainant participation in the Cassation Court ensure that the LIBRA scandal will remain a notable point of reference in Argentina’s recent history. It stands as a powerful illustration of the complexities inherent in the intersection of emerging financial technologies, high-stakes politics, and the enduring quest for investor protection in a rapidly changing global economy. The case ultimately serves as a critical precedent, shaping future discussions on regulatory oversight, ethical endorsements, and accountability within the volatile world of cryptocurrencies.
