The Breakdown - The Memecoin That Might Take Down a President

Episode Date: February 19, 2025

The absolutely wild story of $LIBRA and Argentina's Javier Milei. Even in a world of rugs and scams, this one is brazen. 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 Tuesday, February 18th. And today we are talking about one of the more ridiculous stories of this cycle. A botched token launch that threatens to bring down a presidency as meme coins cause a major geopolitical incident. 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 in the show notes or go to bit.ly slash breakdown pod. All right, friends, well, we got one for you today. Boy, oh boy. There are some days

that the quest for objectivity and giving everything a reasonable shake gets particularly difficult in this industry, and boy, oh boy, is this one of them. I'm sure many of you will have heard of this for those of you haven't. Let me tell you about the saga of Libra, which at this point you got to think is just about the most cursed name in crypto. Anyway, on Friday night, Argentinian president Javier Milay launched a Solana meme coin called Libra. Mila tweeted, liberal Argentina grows. This private project will be dedicated to encouraging growth of the Argentine economy by funding small Argentine businesses and startups. The world wants to invest in Argentina. I was not really around and only vaguely paying attention, but the presumption I saw from the first set of people who were looking at this

was that he had to have been hacked or something. In addition to that statement, Milay included the ticker and the contract address. Hacked or not, though, the token reached over 4.5 billion in market cap in the first half hour before crashing by 90% over the next two hours. You could have, as I did, literally gone out for dinner on Valentine's Day and missed the president of a country incinerating his reputation on chain before dessert arrived. Libra at this stage is currently trading at a $350 million market cap with negligible liquidity. As it became clear, the project was heading south. Miele deleted his original tweet and replaced it with a statement that A few hours ago I posted a tweet, as I have so many other times,

supporting a supposed private enterprise with which I obviously have no connection whatsoever. I was not aware of the details of the project, and after having become aware of it, I decided not to continue spreading the word, that is why I deleted the tweet. To the filthy rats of the political cast who want to take advantage of this situation to do harm, I want to say that every day they confirm how vile politicians are, and they increase our conviction to kick them in the ass. Even among those who like Miele, sympathy for that framing was pretty, pretty low. after promoting a massive pump and dump.

So in the aftermath, on-chain analyst dug into exactly what it happened. The token launched with no disclosed tokenomics, a barely functional website, and few other details. According to blockchain analytics firm bubble maps, more than 82% of the supply was held by insiders and was fully unlocked and sellable at launch. Look on chain posted, the Libra team has cashed out $107 million. Eight wallets related to the Libra team have obtained $57 million in USDC and $250,000 sole worth 50 million by adding liquidity, removing liquidity, and claiming fees. In other words,

this was a massively extractive event with very little precedent, at least in terms of its speed. Most high-profile projects last at least a few hours before self-destructing, but this one was almost instant. As one recent example, the Melania coin launched prior to the inauguration, took four hours to reach its all-time high and two weeks to draw down by 90%. This pump and dump was all wrapped up over a three-day period and could have multiple lasting effects. Alex Kruger and Argentinian economists wrote, The Miele Coin looks like a clear case of fraud, corruption, insider trading, and outright negligence. Professionally managed token launches require teams to operate under the most extreme secrecy

to avoid leaks and to have strong hands, i.e. no team selling. Libra was the exact opposite. Launch details leaked and the team cashed out over $100 million in two hours, extracting over half the cash available in the liquidity pool at its peak. A 97% crash ensued. criminal. It warrants an exhaustive investigation and heads to roll. Kruger also noted that the token was not marketed as a meme coin, but instead explicitly marketed as an investment scheme for Argentinian entrepreneurs. Wasi lawyer offered his speculation on what had gone on behind the scenes. He suggested

that Julian Pei of Kip Protocol approached Miele with the project, which was dressed up as foreign direct investment. Wase continued, quote, they launch, insiders probably buy, they hit up Miele to tweet, Meele thinks cool, free money, why not? Shills without understanding what's happening. Token pumps, they dump. Yes, Julian instructs the market maker to dump because let's get real here, market makers do what the client asked them to. They may have the technical expertise, but they don't casually single-side LP and jeet on people without the project sponsor telling them too. Wasey then suggested that the scam got too big, his words, and everyone involved is now trying to point fingers and distance themselves. He also noted that everyone involved with the project is

docks and has terrible Opsic. David Adler, a progressive international, looked into the trading data and found over 280 million in unrealized losses with over 70,000 wallets with losses under 10,000, and another 2400 with losses up to 50,000. By Saturday night, it was painfully clear how rotten the project was and the damage control began. An investor called Hayden Davis from Kelseyor Ventures identified himself as a launch advisor for the project. In a written statement, he tried to blame the crash on a wave of panic selling rather than liquidity removal. For some reason, Davis ended up holding over $100 million extracted from the project. He said that he was acting as a custodian and did not intend to use the funds for personal benefit. He said that he wasn't comfortable

transferring the money to either Mulei's associates or the Kip Protocol team and proposed inserting the money back into the liquidity pool in hopes of reviving the project. A video was posted alongside the statement in which Davis showed his face, and for context, he's a young man in his 20s. Davis claimed to be working on tokenization projects in Argentina and presented himself as earnest about the success of the Libre token, even after it self-destructed. Another weird dimension of this is that Dave Portnoy, the Barstool founder was inserted into the story through promoting the coin to his followers. There is an entire sub-story here which could be its own show, but the brief summary is that Dave was paid to promote the project, but claims that he returned the tokens he received

in compensation. He claims to have bought some tokens using his own money after Miele's tweet and got rinsed alongside the rest of retail traders. However, unlike the average trader, Dave was refunded $5 million from the project for his losses. And for some reason, he was back on Twitter on Monday promoting a fake Libra token. Over in Argentina, meanwhile, President Miele is embroiled and scandal. And yes, it is absolutely true that he has very strong political enemies that would take advantage of any opportunity to pounce all over him, but pounce they have. Former Prime Minister Christina Kirchner tweeted, from Hayek, you went to Ponzi and you went to the bad pasture. Thousands trusted you bought at a high price in a matter of hours lost millions, while a few made fortunes

with privileged information. Milayu yourself operated as the hook in a digital scam. Weren't you the best president in history? Weren't you the genius of the economy? From self-recllaimed global leader to crypto scammer. Look where you brought us with this madness. You turned Argentina into a casino. Your mask has fallen off. Keep in mind, Miele's entire political career has been premised on removing corruption and grift from the Argentinian political system, which is perfectly replete with it. Meaning, in other words, that this is extremely harmful to Miele's credibility, and one can be forgiven for having the impression that this is merely transitioning the country from one type of corrupt regime to another. Opposition leaders have already requested impeachment hearings.

Argentine lawyers have filed private criminal fraud allegations which were forwarded to the U.S. Justice Department and the FBI. The president's office has instructed the anti-corruption office to investigate all members of the national government, including Miele himself. The Argentinian stock market was down 5% on Monday, demonstrating how fragile investor confidence in the country still is. Miele faced the press to begin the week. He claimed he didn't promote the token only shared the project. He also downplayed the impact, adding, did the state lose money? No. Did Argentinians lose money? Maybe four or five at most. majority of investors are Chinese and American. I shared this the same way I've shared hundreds of things.

My tweet came just three minutes after the coin was created because I'm passionate about these things and found out about it. These are volatility traders who knew what they were doing. This is a private matter between individuals and they participated voluntarily. 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.

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So thanks, once again, to Ledger for sponsoring the show. I will say that even if you think there's scandal here, this idea of people participating voluntarily is at least a little salient. This was probably the arch epitome of Play Stupid Games win stupid prizes. And I genuinely don't know how people think that they're going to get out of these stupid projects unscathed. Maybe it's just that everyone believes that they're smarter than the other guy and can grab a seat before the song of musical chairs ends, but it is pretty hard to get worked up when the entire structure of this part of the crypto industry

is basically designed just to do versions of this all day long. Now, as if all of this wasn't enough, the most insane part of the whole saga, well, arguably, there are a lot of insane parts, unfolded on Monday, when Hayden Davis, the launch advisor sat down for an interview with scam investigator Coffeezilla. The one-hour interview was an extremely troubling insight into what's going on in the world of crypto promoters. Davis explained the mechanics of the launch, explaining that his associates had sniped the token as soon as it went live.

That is, they bought the token using insider information as soon as it was listed. Davis attempted to explain this away as a countermeasure to deter other snipers in the Salana ecosystem doing the same. His attitude seemed to be that this is an insider game that everyone knows the rules of with very little concern for the small retail traders. Referring to contract sniping, Davis said, the vast majority of people betting on meme coins, especially at the beginning, that is the game for everyone. And people that get mad are the people that aren't insiders. All the bishing on socials is all the people that don't get into the deals. You'll never hear them bitch if they are in on the deal.

When pressed on the extractive nature of this insider game, Davis responded, So what do you do then? You don't launch the project? How do you make money then? It seemed completely lost on Davis that there are many viable careers that don't involve launching pump and dump schemes. Davis presented himself as having a genuine belief that meme coins could be social finance tokens, if only someone could figure out how to keep them alive for more than a few days. During these sections, Coffeezilla expressed what had to be the feelings of most people watching, making silent gestures as if his mind was blown. Davis appeared to be admitting to insider trading and market manipulation, with a level of deliberate forethought we don't usually hear.

Coffeezilla asked directly whether it was unfair for Davis to snipe the coin, given that he had launched the coin, to which he responded, no. He said that most of the time when they're sniping, they're, quote, trying to avoid other snipers getting in. The interview also revealed that Davis was an insider on the Melania token, and that influencers were offered the ability to purchase the token pre-launch. Now, of course, this is not the first time Coffeezilla has obtained useful evidence on crypto scams. He did a ton of investigative journalism around Safem Moon, Logan Paul, SBF during the last cycle. But this is definitely the first time we've seen an interview so brief. raisin with no real attempt to obfuscate at all. Zero X-Golden wrote, The CoffeeZilla and Libra interview is just one hour and 11 minutes of the Libra dev admitting

to like 13 international financial crimes which can get you decades in jail. Gainesi tweeted, Kelseyor Ventures profits nine figures farming all of crypto and doesn't hire a PR firm or retain lawyers, instead exposes themselves on a CoffeeZilla interview. LMFAO, I will never leave this space. Indeed, the big point here was that Davis believed what he was doing was fine because it's become industry standard. This behavior had clearly become completely normalized in his mind. Following Coffee Zilla, Davis continued his press tour showing up on Dave Portnoy's show without a clear answer to who owns the $100 million. Whistleblowers leaked a video chat with Davis in the lead-up to the launch. The call

implicated members of the Meteora team, one of the main decks is on Solana. A smaller Sala DFI founder on the call said, everyone was involved, from the insiders, the guy from DeGods, Jakey, everyone and their mother. Everyone knew about it and everyone sniped it. This leak included screenshots of the telegram chat with Davis stating, yeah, fellas, we are trying to max extract on this one. Now, I have skipped over tons of details, but this definitely does feel like a bigger, more all-encompassing influencer scandal

than we've had in the past. Every major KOL, a term that I absolutely despise, key opinion leader, has either gone silent or is publicly claiming innocence. The Meteora CEO has resigned in other Solana infrastructure projects or publicly retaining counsel, although all did I any involvement.

Rather than just an isolated rug, this story has exposed the network of insiders that's been a totally open secret in crypto for years. For many people, this was the final straw after years of the same behavior. Lawrence Day, the founder of Wildcat Protocol, tweeted, OK, I think I might actually be done here. I'm effing tired of this. What's the point in trying to do anything better if the social error is just going to keep sprinting into rakes? Asive Kurecci of Dragonfly Capital proclaimed, meme coin mania has peaked. It's not dead, but the high priest are not getting new converts. Stale ideology is a leading indicator of a movement's death. No more think pieces,

no more manifestos, just keep holding. The people, have become nihilistic about financial nihilism. There was also a large discussion of how to reform the casino-like elements of the industry. Paradigm Security researcher Sam Zizi-San asked, is the social layer even capable of holding people accountable? Salana founder Anatoly Yakavenko commented, social layer pickforks are themselves problematic because they are reactive to an outcome instead of some predefined set of well-established rules. The discussion then turned towards social credit scores, formal community removal of some kind in various other draconian measures. Kobe, however, chimed in to remind everyone that we've been down this road before, commenting,

I do not believe you can effectively socially shame the shameless. This has been happening way before meme coins basically since I can remember in crypto. Every time someone was shamed, they just use it as populist rhetoric. Some of them got even bigger, the accused just counter-accused, etc. There are YouTubers who have spent three cycles promoting scams that are still very popular despite constant shaming from others. Crypto-cyclical nature means they constantly replenish their audience with new entrances as old ones leave. The only people I've ever seemed shamed off this app were relatively credible people that made a mistake or didn't need to use it to make money. The people who should be shamed off here already know what they're doing and have chosen that path.

When Mert, the CEO of Helius Labs, the Solana infrastructure project, suggested that these people should be shunned. Security specialist Taylor Monaghan commented, shunned? The largest protocols on Solana are working together and pushing teams who want to launch shit to these openly sniping and insider trading. The entire stack is a single-sided extractive monopoly where you can't get access unless you play this game and pay these masters. Another big narrative, was that this is the obvious result of two years of enforcement focused on registration rather than fraud. Zach Rines, the community liaison for Chainlink commented, the current meta of meme coin grifting is a direct result of the historic failure and corruption of Gary Gensler's SEC.

Gensler created a malformed incentive structure in crypto where the only safe route was to issue worthless tokens that only exist as exploitative lottery tickets by insiders, rather than create something that could actually create value for society. Some compared the project to the Trump launch with Dancing Eddie tweeting, low IQ people say the following words. Crime is legal. Trump launched a meme coin. None of these people have read any of the legal documents or paid any attention to any of the marketing surrounding Trump. To be clear, Trump is one of the more legally clean tokens I've seen. Lawyer Gabriel Shapiro also pointed out that just because a token isn't a security doesn't mean that

fraud and market manipulation are legal. Still for many, this was a signal to get out of meme coins and back to more solid projects. Nick Carter wrote, Solano was on the one-yard line and fumbled by destroying the economy of Argentina. Dot, it's euphoric right now. Faye's banks seem to be hanging it up as a crypto influencer tweeting, the only advice I'll ever have for anyone regarding crypto ever again, celebrity or otherwise, buy Bitcoin and shut the hell up. Attempting some optimistic takes, Evgeny gave away the CEO of Marketmaker Wintermute tweeted,

and I actually think we're gearing up towards a more positive part of the cycle, flight to quality or whatever. Blockworks co-founder Mike Gipolito had something similar to say, writing, where you're witnessing on the timeline is early stages of catharsis. Just like a host body burns out of virus, grift and speculation is being rejected. already people are looking for real projects to invest in. Crime season is almost over,

fundamental season is about to begin. I don't know, man, I guess. I am and have been for a long time firmly in the camp of people can do whatever the hell they want with their own money. And I don't think we should be involved in trying to police or protect them. I'm extraordinarily skeptical, however, of the idea that somehow there's going to be some self-policing where all the people who are playing these ridiculous games with memecoins wake up and decide to buy Bitcoin instead. I think to the extent that there's room for optimism, It's the degree to which these different parts of the market have been actually siloed. Cryptodontal tweeted,

The best thing about this whole scams on sole implosion that's going on right now is that the scams usually implode while the market implodes, but Bitcoin is still trading at around 100K. The scams were washed out without taking the market down entirely. That's very, very rare. In other words, there is basically zero contagion, there aren't a lot of leveraged losses, and the people for whom this industry is mostly about Bitcoin and the future of finance,

just genuinely don't have to care. I hope that the non-Bitcoin, non-stable coin, non-tokenization side of crypto can come up with something more interesting because the utterly vacuous, pure gambling, nihilistic meme coin thing, it really seems to have run its course. Then again, what do I know? I'm a guy that didn't go in for or get rich from ICOs, NFTs, or defy, some, or either. So you probably don't want to take financial advice for me. For now, though, that is going to do it for today's breakdown. What a crazy one. Maybe tomorrow we can go back to, you know, normal stuff like governments buying big. Bitcoin. Anyways, guys, appreciate you listening as always. And until next time, be safe and take care

of each other. Peace.