Argentina - Pro-bitcoin candidate Javier Milei is being sued for promoting a crypto ponzi
It shows that politicians’ endorsement of crypto policies and projects have the power to cause unexpected - and very adverse - consequences.
Argentina will face a significant presidential election next year. Do Argentine voters elect incumbent Alberto Fernandez and plod on with continuity? Or might voters go with someone on the other side of the political spectrum? Perhaps the boisterous unknown quantity Javier Milei?
I wrote about Javier Milei as a pro-Bitcoin presidential candidate back in April of this year. For Bitcoin adoption in Latin America, Milei’s candidacy is important. The IMF wants Buenos Aires to avoid a pro-crypto policy and focus strengthening public finances. At the same time, Argentina has some of the highest rates of crypto adoption amongst citizens, who often use crypto assets (mainly stablecoins) as a hedge against inflation or a tool for maneuvering around capital controls. It was Milei who started a conversation about dollarizing, maybe even bitcoinizing, the economy.
That’s why it is interesting that Milei is now the subject of a lawsuit claiming he endorsed a crypto ponzi scheme - this coming just as the presidential race in Argentina is heating up. The August 2022 complaint, filed by Juan Pablo Chiesa, claims that a handful investors were dragged into the scheme because of Milei’s explicit promotion of CoinX.
Milei endorsed CoinX in December 2021 with an Instagram post showing him shaking hands with CoinX head Juan Manuel Malaspina. What is complicated for Milei is that the Argentine stock exchange regulator suspended CoinX operations in June 2021 and the company just kept on operating as if nothing happened. The regulator did not immediately intervene.
It is unclear where this will go. It’s possible this scandal will blow over. Indeed, Milei’s rambunctious personality is no stranger to provocation, theatrics and very public and somewhat controversial antics. But it could stick and serve as a weapon for the opposition ahead of October 2023.
The thing is, Bitcoin adoption could actually benefit from this. If Milei successfully comes out and demonstrates that these ponzis are the reason why a regulated Bitcoin standard is better than the hodge podge of peso, dollar and crypto assets prone to scams, then he might be able to make a case for a blend of dollarization (more likely) and adopting Bitcoin in a smart, meaningful way. If he wins on a platform to dollarize and/or bitcoinize, then it is a very big deal for Bitcoin in Latin America.
Bitcoin could lose, though. Bitcoin infrastructure is still perceived by many in Latin American politics as synonymous with fraudulent schemes and ponzi scammers. If Milei wins and becomes remembered for being the man who endorsed these schemes, and fails to crack down on the fraudsters while attempting to deliver a half-baked policy agenda of bitcoinization, it will be easy for Argentina’s Kirchnerista opposition to puncture him and watch his presidency fizzle.
And it might be worse than that. If Milei’s crypto scandal balloons, there is a possibility that Argentine politicians might stay away from anything related to crypto policy altogether for fear of falling in the same trap. And if the IMF gets involved, that starts to look even more politically convenient.