The Breakdown - The $LIBRA Scandal Just Gets Worse

Episode Date: February 20, 2025

NLW brings you the latest updates in the LIBRA scandal, including some seriously gross text messages and the latest geopolitical machinations. Does this mean that memecoins are dead? That's the exploration. Sponsored by: Ledger Ledger, the world leader in digital asset security, proudly sponsors The Breakdown podcast. Celebrating 10 years of protecting over 20% of the world’s crypto, Ledger ensures the security of your assets. For the best self-custody solution in the space, buy a LEDGER™ device and secure your crypto today.Buy now on Ledger.com. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Wednesday, February 19th, and today we are talking about an update in the Libra scandal, someone who's trying to bring back ICOs and much, much more. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link at the show notes or go to bit.ly slash breakdown pod. All right, friends, well, the saga continues. Argentinian president Javier Meles' meme coin scandal is going from bad to worse as more details emerge.

Yesterday, we got even more insight into the way insider networks operate and especially how they think. And yikes, boy, if this is ever an argument for actually getting on the phone and talking. Basically what happened is that text messages written by Hayden Davis of Kelseyor Ventures were leaked to CoinDesk showing. an extremely ugly side of the conversation. Davis was the self-styled Libra launch facilitator and claimed to be an advisor to Miele. He was, of course, the insider who incriminated himself in an interview with Kaffizilla on Monday. The text message is obtained by CoinDesk read, and I swear this is not

parody. Sweet, also we can have Miele tweet and meet in person and do promo. I control that N-word. The unidentified recipient of the text message responded, that's effing sick. To which Davis continued, I send money to his sister and he signs whatever I say and does what I want. Craziest shit. Davis has now obtained PR representation, so let's quickly run through his official response. Davis claimed through his representative that he had no recollection of sending the text, nor does his phone have a record of it. The statement continues, recent media reports claiming I paid President Javier Miele or his sister, Karina Miele, to launch the Libre meme coin, are completely false. I never made any payments to them, nor did they request any. Their only

concern was ensuring proceeds from Libra would benefit Argentina's people and economy. This is nothing more than a politically motivated attack on President Miele. Now, for background, Karina Miele is a member of the government holding the position of General Secretary to the presidency. However, assuming there's some substance to the story and it's not just boasting, which it absolutely could be, this would change the tenor of the legal issues. It implies this wasn't just a one-time connection to launch a meme coin, but an ongoing corrupt relationship with Miele. Security expert Taylor Monaghan commented, I sincerely think people don't realize that the SEC is only a risk to folks who are doing everything right except for some unforeseen scattershot securities law application. Like, relatively speaking,

they're not the thing to be scared of. What's happening here is like FBI, DOJ, four and effing prisons, where you have zero rights. Pantoshi wrote, yeah, this one is going to get the attention of the DOJ. I'm sure for some of these influencers, the SEC is the least of their worries. SEC is civil, DOJ is criminal. A lot of these KOLs are going to have new homes. Apparently, even could be RICO charges due to it having political connections and organized crime. I, of course, have no idea about any of that, and so would never comment, but that's the nature of the conversation. Over in Argentina, Miele is facing mounting scrutiny. Local newspaper La Nassian reported that Miele's entourage has been coordinating with Davis

to manage the scandal. Their sources said that Miele agreed not to accuse Davis of wrongdoing and would send an emissary to meet with him later this week. In interviews, Davis has been instructed not to give any more interviews to the press, which like, yeah. Zero X quit the VP of Blockchain for Yuga Lab spoke for the community when he tweeted, please keep doing interviews, Hayden. Investor Andrew Steinwald wrote, I swear if the Libra meme coin drama topples the head of the state of Argentina. We've officially gone full clown world. Another part of the conversation is that there's also a real sense that the Salana casino might be over for now, given that the insider games have been revealed. Most traders already felt like they were playing a rigged game, but having the depth

of the issue spelled out takes it to a different level. One of the most shocking parts of this story has been the revelation that Ben Chow, the CEO of Meteora, one of the major dexes on Solana, was recorded discussing meme coin launches with Davis. He has since resigned in Meow, the suit anonymous founder of Jupiter and Meteora has hired legal counsel to conduct an investigation. Obviously, it's one thing if shadowy crypto funds are front-running retail based on insider information, but a completely different thing if the infrastructure providers are taking part as well. Lexa Pro Trader commented, basically the fact that Meow and Jupiter allowed Melania to happen saw the devastating effects on our space, didn't fire Ben and then allowed Lieber to occur as

all the evidence we need they are entirely complicit. And he claims to the contrary or total BS, not buying it. Beanie Maxi tweeted, crazyest thing I've learned in the past few days is that Meteora is sniping its own tokens. I haven't posted this before, as it seems almost unbelievable because the platform has made over 300 million in the past month from fees. It wouldn't surprise me if the Libra sniper that Hayden is referring to is actually Meteora double-crossing and counter-trading Kelsior. Nothing is unbelievable anymore, seems no relationships are sacred. If this is true, Kelsior is just a pawn. Kelsior does the dirty work, takes all the heat, Meteorra and Jupiter make literally billions of dollars. It's just speculation, but it all makes

sense. And if this is true, it's a black swan scenario, and especially bad for Solana, who at least must have suspicion. of this. There's a lot of discussion in some corners of Twitter that the single-sided pools used on Meteora are designed to make this kind of insider trading less noticeable because it can be done directly through liquidity pools. To reiterate, not only do I not have an opinion on this, I am not even in a position to know how feasible that would be. I am just reporting what the state of the conversation is, and it is not good. Bubble Maps has been doing some interesting work unpacking some of the strategies employed by snipers and is developing a few profiles of suspicious

activities. The whole insider complex is being put under a microscope and the game looks dirtier by the day. Also, just for the sake of completeness, the other protagonist in the story, as I mentioned, was Dave Portnoy. He promoted another three meme coin pump and dumps yesterday, including one he launched himself, showing a commitment to never giving up and never getting legal advice. Hello, friends, I am thrilled to share that Ledger is once again partnering and sponsoring with The Breakdown. Many of you know, but for those of you who don't, Ledger is the most secure hardware wallet for your crypto and logins. It's trusted by 7 million users and secures 20% of the world's digital assets. What's more, Ledger is a lot more than wallets. Over the recent years,

they've built a comprehensive ecosystem of products and services, all of which are designed to make digital ownership more secure and accessible. You can buy your Bitcoin with Ledger and Ledger Live and so much more. Basically, not only did they want to keep your assets secure, they want you to be able to do more with them. Ledger's newest devices, the Ledger Stacks, and Ledger Flex, introduced the world's first secure touchscreens, making it easier and safer to manage your transactions and assets. Alongside Ledger Stacks and Ledger Flex, the company also launched the Ledger Security Key app, offering a safer alternative to traditional passwords and enhancing your digital security. If you are in this space, you owe it to yourself to at least check out

Ledger and their ecosystem what they have available to you. So thanks, once again, to Ledger for sponsoring the show. Basically, if you take a step back, this feels like a polycrisis for the meme coin space, the Solana protocol, and much of the speculative end of the crypto market. Nick Carter tweeted, you don't hear anyone talk about how meme coins are giving power back to the people anymore. It was naive at best, but once meme coins became a big business, it was obvious they would be captured by industrial meme coin intermediaries. As it turns out, the intermediaries were extracting huge sums by front running and insider trading, so we can retire the assonine talking point about meme coins somehow being fairer than other types of token launches. Others, perhaps

somewhat tongue-in-cheek, given what Solana survived after FTX, had comments like Fiscanties who wrote, It's Never Been More Over for Solana. Pack it up, boys. Last one to leave turns off the central validator node. Others turned through a discussion of how to fix the issues revealed by the saga. Zodonymous Pump. Fun founder Alon wrote a long thread about the state of play, commenting, I'm disgusted by the events that transpired over the past days surrounding Libra. The people behind this project made substantial personal gains at the expense of many users, the ecosystem, and even an entire country. This weekend incidents hurt especially as Pump. Dot Fund was built to explicitly tackle some of the issues that have been exposed over the past days. Most importantly,

the fact that middleman-like development teams, quote-unquote, and market makers were involved is absurd. Creating a meme coin should be so stupidly simple that anyone can do it. The mere existence of such actors means that anyone can easily be taken advantage of. When we created Pump. Fund from the very start, it set out to standardize, automate, and democratized coin creation to build in a baseline level of safety, simplicity, and fairness for every launch. He suggested that the demand for highly risky speculation isn't going anywhere, so the imperative for platforms like Pump. Dot Fund to, quote, provide guardrails to ensure users are as safe as possible while meeting their demands. He provided a series of recommendations

that largely involved greater education, disclosure, and protection. Indeed, one of the interesting things about the recent string of meme coins gone awry is that none were launched through Pump. Not Fund. As Alon pointed out, there's still a lot of potential for exploitation after a token goes live, but Pump. Dot Fun has at least ensured their tokens have fairer tokenomics by making everyone buy-in at their own price rather than getting an insider allocation. It's not to say that the platform doesn't have its challenges, it's still riddled with insider games, and has, of course, profited to the tune of hundreds of millions of dollars from trading fees over the past six months, but there's something to be said for not being as awful as a lot of these things. Fiscontes again

wrote, seeing a lot of takes about how we need better launch mechanisms. We already have much better launch mechanisms, though. The problem is that most of the stuff that's launched is worth zero. Van Spencer of Framework Ventures tried to put a positive spin on it, writing, Salinas transition to something more institutional will benefit everyone in the space. It will take time, but nerfing the main characters of the meme movement is the first step. ETH had to get rid of NFT grifters as well. Interestingly, another approach in dealing with the current state of affairs comes from industry veteran Kobe. His angel investing platform, Echo, is considering adding an ICO platform. Currently, Echo allows users to invest in token projects prior to

launch, giving regular investors access to the opportunities that are usually the exclusive domain of venture firms. The platform is gated off to accredited investors in compliance with local laws, but still gives much broader access than the previously available. With regulations around token offering starting to soften in several jurisdictions, could we see ICOs come back as a viable launch pathway? Earlier this week, Kobe pointed out that low-float VC coins are still shunned by the market, while valueless meme coins loosely associated with projects can run up huge market caps. Discussing the potential of an Echo ICO platform, Colby told the block, we just want to make stuff so that people can fund decentralized projects without selling most of it to one or two entities.

Fundraising happens at various stages of a project's life cycle, and we currently only cover the really early stages. There isn't a very good way to do a launch sale today. Your best bet is probably coinless, but this is quite limiting for several reasons. So I think there's maybe something we can do to fix that dynamic and give a better option to people. But as always, I might be wrong and we might fail. I'm honestly surprised we got this far, but I'm thankful things are going okay, and we'll keep trying to do stuff until it stops working. While the plans are vague, there is certainly some sense that maybe it's time to go back to the well on ICOs. The problem from the ICO mania of 2017 was absolutely not that the mechanism didn't work. If anything, it was the

inverse. Capital formation was too efficient and available with basically no barrier to entry. This led to hundreds of scam ICOs, launching with nothing but a white paper and zero intention to deliver a product. And much like the meme coin era at the time, a distaste, a distinct. lack of consequences allowed scams to flourish. ICOs have the benefit of being a little slower than the current meme coin launches by allowing open pre-sales at a fixed price. So is it possible that adding a good faith intermediary like Echo could improve ICOs? One of the things that makes it's really interesting is, of course, the regulatory context that we find ourselves in. I think it's a fair argument that part of the reason that there's so much of this unscrupulous experimenting is that the space for above-board

experimenting has been extremely limited. In a world where people can actually accept, experiment with security-like experiences around tokens in a safe and legally compliant way, probably creates a lot more incentive for people to do that rather than just create these shady subcultures. Indeed, SEC Commissioner Hester Perth is called on the industry to put forward suggestions about what a reasonable token launch framework would look like. In a discussion with Alex Thorne of Galaxy Digital last week, Perce said, we are really looking for input. If people have great ideas, get them to us, get them to us quickly. We really want to be able to move along with some of these things. She highlighted the agency as very interested in getting some

set up in the short term to bridge the gap before more permanent rules can be established. Lastly, though, one of the really striking things about this entire mess is that Bitcoin is almost completely isolated. During previous cycles, the unwind of scams would drag Bitcoin down along with them as everything was tightly connected. This time, that just doesn't seem to be the case. Matt Hogan, the CIO, a bitwise remarked that even sentiment is isolated, commenting, gave a keynote speech at a retail investing conference today. Three big takeaways. One third of the audience owned crypto.

One third was considering allocating soon. Zero percent had heard of Libra. The net new buyer of crypto is in a very different place than established crypto investors. Indeed, as Size Chad wrote, Normies have no idea that Libra even happened. And that, I think, is obviously an extremely positive thing. Later this week, we will get into some of the positive stories going on in the Bitcoin space specifically. For now, that is going to do it for today's breakdown.

Appreciate you listening, as always. Hopefully we don't have another crazy update in this story tomorrow. But until then, be safe and take care of each other. Peace.