Argentina Intensifies Investigation into Libra Scandal with Comprehensive Asset Freeze

Argentina's federal judiciary has mandated the freezing of assets belonging to US promoter Hayden Davis and two alleged intermediaries linked to the troubled Libra token. This development escalates the ongoing investigation into one of the largest crypto scandals in Latin America.

Key Takeaways

An order by Judge Marcelo Martínez de Giorgi leads to an asset freeze for Hayden Davis and associates.
Assets include digital wallets, bank accounts, and real estate linked to the principals of the Libra scandal.
Prosecutors aim to secure approximately $100-$120 million tied to the alleged fraud.
The Libra memecoin saw significant volatility following its promotion by Argentine President Javier Milei.
The investigation raises questions about political connections amid a backdrop of potential organized fraud.

Argentina intensifies investigation into Libra scandal with comprehensive asset freeze

Comprehensive Asset Freeze

Argentina’s federal judiciary has ordered a sweeping freeze on the assets of Hayden Davis, a US promoter, along with two intermediaries linked to the failed Libra token. This action signifies a more profound investigation into what has become one of the largest cryptocurrency scandals in Latin America.

The asset freeze, mandated by Judge Marcelo Martínez de Giorgi, encompasses digital wallets, bank accounts, and real estate belonging to Davis, Argentine operator Orlando Rodolfo Mellino, and Colombian trader Favio Camilo Rodríguez Blanco. Prosecutors assert that this step is crucial to prevent any potential asset transfers that could be linked to fraudulent activities, as they seek to trace a staggering money trail estimated between $100 million and $120 million.

This ruling also directs the National Securities Commission (CNV) to inform all virtual asset service providers in Argentina to ensure the asset freeze extends to domestic crypto platforms.

Update on the Libra Token Scandal

The investigation revolves around Libra, a memecoin that gained popularity in February after Argentine President Javier Milei briefly showcased Davis as a blockchain and AI advisor in a social media post. This endorsement led to a rapid token surge followed by a stark decline, ultimately causing an estimated $250 million loss for over 40,000 retail investors.

Hayden Davis, who has a history of promoting other meme-based tokens, has emerged as the central figure in the alleged memecoin scheme. Earlier in May, a US judge in New York had frozen $57 million in USDC stablecoins connected to Davis and his associates from the now-defunct Meteora exchange, although the freeze was later lifted when it was determined that Davis and former Meteora CEO Ben Chow did not attempt to transfer the funds, leaving open the possibility for restitution.

This lawsuit, led by both American and Latin American investors, accuses Davis, Chow, and others of orchestrating a “rug pull.” The plaintiffs invoked the RICO Act, claiming that Libra and M3M3, another project initiated by Davis, reflect a continuous pattern of organized fraud.

Political and Cross-Border Implications

Although no formal criminal charges have been brought against President Milei, the Argentine investigation has drawn scrutiny, especially as Davis's cryptocurrency movements seem to coincide with significant political meetings. Court documents indicate that intermediaries were converting tokens to cash during Davis's meetings with Milei at the Casa Rosada, intensifying the "Cryptogate" controversy that has recently captured headlines in Argentina.

Judge Martínez de Giorgi asserts that the asset freeze will remain in place as long as necessary to preserve evidence and facilitate potential restitution for investors. This coordinated effort between Buenos Aires and New York exemplifies a rare occasion where courts in two different continents are actively targeting the same blockchain-based assets.

For regulators, the Libra scandal underscores the growing entanglement of cross-border enforcement and political influence in cryptocurrency investigations. Notably, even amid these allegations, Milei’s party, La Libertad Avanza, won the midterm elections, establishing him as a prominent candidate for the presidential election scheduled for October 2027.