Back Door Men
The unfolding of the $LIBRA-gate developments in the Milei administration
Welcome Avatar! There are years where nothing happens, but these years do not exist in Argentina. The last few days have been packed with decades, which will reverberate for the foreseeable future. Before moving on to the next current thing, we will dig into the recent developments around the $LIBRA launch, and potential implications for Milei’s presidency.
Yeah, I'm a back door man
I'm a back door man
The men don't know
But the little girl understand— Willie Dixon
Magic Alex
Close to fifty years ago at the height of Beatlemania, it would’ve been an impossible task to find a teenager who wouldn’t have done whatever it took to infiltrate into the inner circle of the Fab Four, where most of the magic happened.
Yannis Alexis Mardas was one of them. In 1965, Mardas was a 23-year-old Greek self-professed inventor. He arrived in London that same year on a student visa, and started working as a TV repair man. Meanwhile, he befriended acquaintances of The Rolling Stones band member Brian Jones.
Jones eventually introduced Mardas to John Lennon, and it was at this point that Mardas impressed Lennon with the Nothing Box; a small plastic box with randomly blinking lights that Lennon would stare at for hours while under the influence of LSD.
Lennon later introduced the renamed Mardas to the rest of the band members as his new guru, baptizing him as “Magic Alex”. Paul McCartney referred to him as the “Greek wizard”.
Mardas had allegedly claimed that he could build a 72-track tape machine, a claim that cemented his proximity to The Beatles for four years (1965-1969) as the Greek Wizard became head of Apple Electronics.
Mardas was given the job of designing the new Apple Studio in Savile Row, amongst other fabulous projects that were doomed to fail under his command. His schemes lost Apple and The Beatles at least £300,000 — which would equate to close to £5 million in 2025 pounds —, without anything to show for the investment.
It seems that Javier Milei has bumped into his very own Magic Alex.
Hayden Unhinged: The $LIBRA Hustle
In LIBRA: Imbalanced Confidence, I went over the inner workings of the rug pull orchestrated by Hayden Davis as the person responsible for launching $LIBRA in detail.
A few days later, investigative journalist and successful crypto scam exposer Coffeezilla had the pleasure of interviewing Hayden Davis, who contacted him to tell his story.
The interview ended up being a confession to a laundry list of federal crimes — most of them apparently unbeknownst to Hayden, who mentioned them as if he had acted in good faith.
If you haven’t seen the interview, I recommend you check it out, it was an instant crypto classic that will undoubtedly provide us with memes for years to come.
It is estimated that Hayden Davis has ~$100M from the $LIBRA launch that he claims belongs to Argentina in 4 different wallets, and other wallets connected to his firm with another $300 million, mostly in the form of $LIBRA coins.
“This is an insiders’ game. It’s an unregulated casino,” Hayden said in the interview, confirming that early buyers at a private dinner in Washington, D.C. were given access to Trump’s token before the public.
This accusation could very well be true, but uproar about this in the Unites States was minimal, another sign of the times of financial nihilism we live in: nobody cares except a few anons who are deep in the crypto trenches.
Hayden denied that President Milei received any kind of kickback from the $LIBRA launch. Given Hayden’s behavior in the last few days, if he would’ve had the option to include Milei as one of the beneficiaries, he could have certainly used that to try and “clear his name.”
Some spectacular blow ups ensued after more people started digging deeper into the transactions and meme coin launches on the Solana blockchain.
Ben Chow for example, the Meteora CEO, stepped down. Meteora’s DeFi platform on Solana was designed for the creation and exchange of meme coins, and was one of the key platforms for the liquidity providing on $LIBRA and other coins.
We surely haven’t heard the end of this, and more dominoes will likely fall, especially in the Solana ecosystem.
Hayden Davis also confessed to having paid back $5 million to Dave Portnoy, who he told about $LIBRA before the launch, and who invested $5 million but lost it all due to the liquidity sniping by Hayden & Co. Rich influencers get a refund, the rest does not.
Finally in a second interview with that same Dave Portnoy, Hayden tells his rug refund buddy Dave that he doesn’t know what to do with the $100 million he is sitting on, and that he wants “Milei’s team” to tell him what to do with the money:
Davis: The question is what to do with money that's not mine. I'm never claiming it's my money. I'm not running off with the money. I don't want, I have no desire to run off with the money.
Portnoy: Whose money is it?
Davis: It's, I mean, that's what I don't know, that's the question. I don't know. It's definitely not mine. It's Argentina’s. I don't know what association you give with that. The point was like, Milei’s team or who I thought was Milei’s team.
Again, the question pops up about the identity of the people on Milei’s team who were in such good spirits with Hayden & Co, but have now gone missing.
Sharing, Not Promoting.
With Hayden doing the rounds as the guest of honor spilling the meme beans, Milei was preparing for a pre-recorded TV interview with Jony Viale, a journalist who has been “on his team” from the start and would likely lend a helping hand to frame the interview in the most favorable way possible for the president.
In the afternoon leading up to the broadcast, just little over an hour after Hayden Davis finished his interview with Portnoy, Milei retweeted a step-by-step plan on how to buy $LIBRA with the intention of showing how hard it was for the average Argentine to buy the coin:
Internationally that repost got lost in translation, and meme coin degens started frantically buying $LIBRA again, as they thought the repost was a renewed Milei endorsement for the coin:
After Milei got the news of this misunderstanding, he deleted the repost, and the inevitable dump followed. Cries went out for someone to please take away Javo’s phone, since he was doing more harm than good at this point.
At 8pm that evening, Milei’s interview finally aired on TN, which boiled down to the Argentine president trying to do damage control. The lack of responsibility was once again apparent, when Milei said: “I did not promote it, I shared it.” As Arthur Hayes mentioned in a tweet, this has to be the line of this crypto cycle:
Milei also compared buying $LIBRA with going to the casino, where gamblers know the odds are stacked against them. Except the difference was that in his original post, Milei specifically promoted “investing” in $LIBRA as a way to support local Argentine companies. The gambling and casino elements were nowhere to be found, and only when Hayden Davis opened his mouth for the first time did people realize he was the one who controlled the house.
One of the more interesting parts of the interview was what Milei mentioned about his accessibility, and what came right after:
“I have something to learn.. I took over the presidency and continued to be the same Javier Milei of always. Unfortunately, what this shows me is that I have to take hold and put up filters. It can't be so easy to get access to me. Now we will have to put up walls & a filter.”
However, when Viale asked him if he would consider getting rid of Novelli and Terrones Godoy, two advisors who were exclusively mentioned by Hayden Davis in the Coffezilla interview as the co-creators for the $LIBRA plan within “Milei’s team”, the President said that Novelli was a very creative guy and that he would keep him on.
On that same February 17th, Novelli and Terrones Godoy had made an official statement admitting that they not only made the “intro”, but that they also charged Kelsier Ventures and KIP Protocol as “consultants”. That seems like a pretty low wall to climb in order for Hayden Davis to get close to Milei.
Milei keeping these two people on as advisors — they are external, not government officials — does not sound like he is cleaning house, and below we will speculate on why that protection might be in place.
When the TV interview was concluded, the person in charge of uploading the interview to the TN YouTube channel had uploaded the raw footage “by mistake”.
In this unedited version, when Viale asks Milei about the potential legal implications, Milei tries to make a difference between “his personal X account” and his presidential role. One of Milei’s advisors, Santiago Caputo, stops the conversation saying that it could cause legal problems for Milei to continue down that path. This was all removed from the footage that aired on TV and caused a big stir in Argentina.
At the end of the interview Viale is visibly annoyed with Caputo and whispers hijo de puta in his direction, thinking that it would all end up being edited out.
Of course this raw footage did not get released “by mistake”, and even though the head of TN YouTube Fernando Vailati resigned after having uploaded the unedited interview, the damage was already done. We are in an election year after all, and the opposition still has many ways to conduct operetas in mainstream media, especially since the Milei administration stopped handing out media subsidies. If it was leaked on purpose, Vailati would have been handsomely compensated for it.
PRO and Kirchnerists alike started a media offensive directly after this leak with the intention to milk it to its fullest extent. It was no surprise to see that one of the usual suspects and legacy media darlings, former President Mauricio Macri, seized the opportunity for a press conference the next day:
"We have seen a president who was poorly cared for and poorly surrounded. I do not doubt his honesty, but he needs to surround himself with better people.”
If it weren’t for these self-inflicted imago bombings by Milei through the $LIBRA-gate, the opposition would have zero artillery, since the data more than supports the success of his administration’s economic agenda so far.
The Screenshots
But unfortunately, even more incendiary artillery arrived soon after. In a La Nación article, a range of screenshots were released, sent by Hayden to other crypto bros. This was later picked up by Coindesk, which caused renewed international attention to the $LIBRA scandal.
Given the fact that Argentina is in an election year and there are many sides that would benefit substantially by a Milei impeachment, sources have to be triple checked, since many things could turn out to be a set up.
This is why I initially called for reviewing the sources, and tried to get the Coindesk journalist Danny Nelson to answer some additional questions. The fact that none of the screenshots were included in the CoinDesk article seemed suspicious or strange, and likelihood of them copying a piece directly from La Nación were high.
Hayden Davis came out with a statement shortly after CoinDesk published the article, in which he denied making payments to Argentina's President Milei and called media reports “politically motivated.” When asked if he refuted making such claims over text messages, his PR rep replied that Hayden had no recollection or record on his phone.
Unfortunately, where there’s smoke there’s usually fire. The original source of the screenshots has reached out to me personally and I have reason to believe they are likely real.
Right after the $LIBRA pump and dump broke out, Ethereum co-founder Charles Hoskinson mentioned his experience at the same Tech Forum Argentina event where KIP Protocol was likely “hired for $LIBRA”: he was asked for bribes to meet with Milei, and said Milei was surrounded by people willing to stab him in the back.
In another interview between Laura Shin and Dio Casares, she asked more questions about the piece he wrote [now deleted but quoted in the previous $LIBRA article] about his inner circle connections on the ground and the rumours in the weeks leading up to the launch.
In that talk, Casares mentions one official very specifically, but doesn’t give a name:
“I got a more serious message from someone I respect a lot and who tends to be right, who claimed that an official in the government had actually been functionally paid off, whether that's like a bribe or like consulting fee, whatever, and that the official, they told me, was very high in the government.
They told me who it was, but I'm not going to say it because I can't confirm that. And that made me very concerned to the point where I reached out to a bunch of people in the industry in Argentina specifically, and also actually to politicians.
I messaged one of the more known ones, Demian Reidel, who told me that he didn't know about any kind of token that was going to be launched, and that there would be no official government token. He basically told me it would be alright, so I kind of calmed down. And then it was very much not alright.
The main reason I wanted to write that article was to kind of show that there was a lot... In the immediate moments after it launched, the story was kind of Milei launched a token, when in reality there was this nebulous group behind the token that functionally took advantage of him and his position.”
This is the Milei team Hayden Davis keeps referring to, and in the screenshots that seems to also include his sibling. Could that be the main reason why the other two advisors are still “on the team”, to make sure they don’t let the coin out of the bag?
Time will tell.
So far, two more days have passed since these events, and media outlets and local social media influenzas have already moved on to different topics — from both sides, opposition and LLA-supporters alike. Doorknob attention span confirmed.
Autist note: Read more about Karina Milei’s role in the Milei government here:
Headlines Sell, Impeachment Does Not
Right after the $LIBRA scam became apparent and Hayden Davis took responsibility for the launch, headlines about potential impeachment procedures against Milei started popping up left and right, mainly in international media outlets.
On the face of it, the authors of these articles have forgotten the sign of the times. Especially in Argentina as a rule of thumb: nothing ever happens. For an impeachment, an absolute majority in Congress is needed, which is not feasible. Opposition legislator Graciana Peñafort from the Peronist party explained this the same day the scandal broke out:
“Let's go in order. Personally, I have few doubts that the Milei and crypto case falls within the Criminal Code. I have always defended the principle of innocence and for that reason I believe that Milei, like any citizen, deserves a fair trial in which he can defend himself from the accusations, regardless of what I think in my heart of hearts. Before that, he is as innocent as anyone else, the National Constitution and the Law say so.
Having said that, I analyze the possibilities of impeachment and in doing so I recognize that there would not be a chance that the votes would be gathered to bring it to fruition. I do not think it is bad, just inconclusive.
If the decision were mine, I would advocate that with a simple majority of deputies - a number much more possible than the 2/3 required for impeachment - the Chamber of Deputies reject Decree 70 and deprive a president of his discretionary powers because he advertised something "without being informed." For having demonstrated that beyond criminal law he lacks the moderation and criteria to exercise them responsibly.”
Keep in mind that this was before the screenshots, but then again, nobody is talking about them anymore and they have faded into the background.
Taking away Milei’s discretionary powers is still and option, which would jeopardize his deregulation agenda, since it means that many of the measures in the Ministry of Deregulation would have to go through Congress and the Senate first, instead of signing them directly by Executive Order.
This would slow down the pace of reforms, which is not the end of the world given the fact that the October mid-terms will likely deliver La Libertad Avanza a lot more seats in Congress and the Senate, and that will amplify the legislative support for Milei’s deregulation agenda — besides that, with a majority they could also vote to give him discretionary powers once more, as has been done with many presidents in the past.
UCR Senator Eduardo Vischi, filed a bill to create an Investigative Commission for the $LIBRA-gate on Monday. Yesterday, this same Senator voted against the creation of the Commission that he himself proposed. That vote stopped Congress from investigating Milei, since 2/3 were needed it was 1 vote short, lol. One can only speculate what dirt they found on him, or whether a suitcase was involved. Perhaps he just changed his mind.
In terms of popularity, at least up until now this fiasco does not look likely to cause a major disruption in the perception of the average Argentine voter.
A Synopsys report identified a historic peak of negative digital mentions in relation to the Argentine president, and another consulting firm registered great discontent over Milei's decision to promote the meme coin and the TV interview in which he failed to clarify the facts.
Another survey revealed that 7 out of 10 Argentines think that the crypto scandal caused a negative impact on Milei's public image. However, and despite these numbers, one in two respondents still retains a positive image of Milei, which translates into strong support when thinking about the future and what will happen in the next legislative elections in October.
Yes, many libertarians are disappointed mainly that Milei pitched a shitcoin instead of Bitcoin or even a real token with a clear whitepaper and setup, but they also understand that there is no real alternative. The majority does not want to go back to Peronism, at least not yet.
If played correctly, Milei comes out of this debacle as a victor, at least locally. This whole situation reminds a lot of the debate with Massa before the runoff. Even though to the outside observer it seemed that Massa had crushed Milei in the debate, most voters still sided with a Milei who was under attack by a very politically savvy bully.
Now, despite Milei giving the media machine ample munition to do bash his administration and decisions he made as President, something similar is happening. The general sentiment is that Milei made a mistake, owned it, and besides, most Argentines did not get burned on $LIBRA, except for a few degens.
Milei admitting from day one that he made a mistake — although without cutting ties with those two advisors — definitely works in his favor.
International Outlook
Soon after the possibility of a Milei impeachment started doing the rounds on social media, president Donald Trump came to the rescue and posted the following quote on Truth Social, indicating he had his buddy’s back:
Financial institutions like Bradesco in Brazil and Morgan Stanley in the US doubt that the $LIBRA fiasco will have much long term impact on Milei’s presidency.
In terms of the Argentine stock market, nothing happened, with a healthy continuation of the upwards trend. The different exchange rates, including the black market rate (blue), remained stable despite an initial fear for a flight to safety out of the peso carry trade after $LIBRA blew up.
JP Morgan expects the most important drivers for continued stock price increases will be the lifting of capital controls and the mid-term elections in October.
Bank of America organized an “Argentina Day” summit in New York this week, with economists, political scientists and portfolio managers, and maintains an optimistic view on Milei’s administration, despite $LIBRA. Most expect an agreement with the IMF to be accelerated and finalized soon.
Javier Milei himself travelled to Maryland with his team yesterday to talk to IMF officials and meet with Trump executives at CPAC. Milei also made sure to bring Elon Musk a present: a red metallic chainsaw for his DOGE department, engraved on its side with the Spanish slogan Viva la libertad, carajo.
Judging from the continuation of the natural order of things from before $LIBRA, it very much looks like the negative impact for Milei could be minimal. Demetri Kofinas summarized this encounter between Elon and Milei very succinctly: “Give the people a good show. It’s what they want.”
As long as the people want a good show, the show will go on.
Conclusion
No administration is immune to back door men in the form of Greek wizards and meme coin snipers trying to get a hold of a piece of the pie, not even one of the greatest pop bands. Milei’s administration seemed particularly susceptible to this, given its lack of political cohesion and infrastructure, and the fact that Milei still wanted to portray himself as a “common people’s guy” meant getting access to him was relatively easy.
So easy in fact, that I have never witnessed an administration in all my years in Argentina that is so accessible to the common voter, and this Patagonian rodent has met with several government officials at normal public events, without needing specific invites or bribes of any kind.
This approach clearly also has its downsides, which we have seen play out in the past few days, and opens the backdoor to men like Hayden and officials close to Milei, who take advantage of this.
None of Hayden’s screenshots are proof that any payments took place, so this will all likely blow over unless more evidence comes out and we see actual footage of suitcases changing hands, USDT wallet transactions, or other incriminating material. Where there’s smoke there’s fire, and this fire came a little too close to burning down the power structure around Milei. It could still linger on in the background if more evidence comes out.
The hope is that this is a wake up call for the Milei administration, to refrain from bringing more damage by insiders pitching personal cash cows that do not get Argentina anywhere.
Milei’s reputation, at least locally, has not suffered as much as one might have expected, and the October elections do not seem to be in danger. The fact that there is no power alternative in Argentina at the moment helps, and few voters want to return to the Peronist politics from before Milei.
The most frustrating thing about the whole $LIBRA-gate is that a real project would’ve potentially raked in several BCRAs in billions of dollars for Argentina, and I still think the government should consider launching a Golden Visa, a citizenship by investment program and other more serious investment incentive programs like the RIGI.
A pivot to Bitcoin is maybe too soon after all that has happened and could endanger the IMF deal. In the long term it would be a welcome addition to the agenda; it certainly has had a positive impact for El Salvador.
However, at this stage laying low without any new big announcements while cleaning house is probably the best idea. Milei has launched an urgent internal investigation into the $LIBRA launch, and all companies or individuals involved in said operation. The real question is whether Milei is willing to clean house, or if it is too close to home?
See you in the Jungle, anon!
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Thank you for detailed investigation. hopefully it will be a learning experience for Milei and nudge him back to focus on reforms
Great coverage Mara