NextFin News - An Argentine federal judge has dismissed the criminal investigation into President Javier Milei, his sister Karina Milei and nine other people over the $LIBRA memecoin collapse, ruling that the events "do not constitute a criminal offense." The decision, issued on Friday 23 October 2026, removes the most immediate legal cloud hanging over the Milei administration. It does not, however, answer the question that still matters to investors and markets: how did a token that reached more than $4 billion in market value within an hour lose over 94% of its worth, and what does the closure of the case mean for the credibility of Argentina's institutions and the risk premium on its assets?
A Legal Cloud Lifts, but the Losses Remain
Federal Judge Marcelo Martínez de Giorgi granted the dismissals requested by prosecutor Eduardo Taiano, ending an inquiry that had run since February 2025 into possible fraud, influence peddling, abuse of authority and incompatible negotiations with public office. In a 60-page ruling, the judge found that the facts under investigation did not amount to a crime and that no "penally relevant deception" had been identified that induced investors to buy the token. The price collapse alone, he wrote, was insufficient to prove fraud without evidence of a deceptive act.
The dismissal covers all 11 people under investigation, including Karina Milei, the president's sister and Secretary-General of the Presidency, and Hayden Mark Davis, the American founder of Kelsier Ventures, the Delaware-registered company that created the token. None of the 11 was ever formally questioned as a suspect, according to a translation of the decision. The judge also found no evidence that Karina Milei had requested or received money to arrange meetings between the president and entrepreneurs linked to the project.
Facilitating a contact or helping to organize a meeting does not, in itself, amount to influence peddling, the judge wrote.
The facts of the episode remain stark. On the evening of 14 February 2025, Kelsier Ventures created the $LIBRA token as part of a project called "Viva la Libertad." Minutes later, Milei promoted it to his followers on X, Instagram and Facebook. The price surged from $0.000001 to $5.20 in 40 minutes, pushing the token's market capitalization to about $4.6 billion. The founders held roughly 70% of the supply. When they sold, the price fell 85%, and by the next day the market cap had shrunk to about $162 million. According to blockchain analytics firm Nansen, 86% of traders lost money, a combined $251 million, while nine founding accounts are estimated to have made about $87 million.
Milei deleted the post hours later and said he had acted in good faith.
I was not aware of the details of the project and once I found out, I decided to not continue giving it publicity.
Forensic examinations of phones conducted in November 2025 and revealed in March 2026 reportedly recovered a draft contract between Milei and Davis worth about $5 million, and showed repeated conversations between the president and Mauricio Novelli, the Argentine intermediary who introduced him to Davis. Those findings did not change the judge's legal conclusion.
The scandal rippled well beyond Buenos Aires. In May 2025, Circle froze $57 million in USDC linked to the controversy. A federal judge in New York dismissed with prejudice an investor lawsuit against Kelsier Labs, Davis and others on 29 September 2026, less than a month before the Argentine ruling. And the lower house of Argentina's congress opened its own political inquiry, whose chairman, Maximiliano Ferraro, later criticized the failure to call defendants for formal questioning.
After the ruling, Milei celebrated on X, writing that "the truth always ends up prevailing" and accusing his critics of "an enormous political and media operation whose sole aim was to damage the presidential office for political, coup-like reasons." "Who will compensate me for a year, eight months and nine days of lies, slander and insults?" he asked. Economy Minister Luis Caputo and Deregulation Minister Federico Sturzenegger welcomed the decision. The opposition responded in kind: La Cámpora, the youth wing aligned with former president Cristina Fernández de Kirchner, wrote that "there is no justice in our country. The judiciary is controlled by a mafia that serves those in power."
The legal question may be settled, at least at this level. The economic and political questions are not.
The Judge's Logic: No Deception, No Crime
The ruling rests on a narrow but important distinction. Argentine fraud law requires proof of a deceptive act that induced victims to part with their money, and a causal link between that deception and their losses. The judge found neither. Milei's post was promotional, but the court treated it as a personal act rather than an official state endorsement, and it found no evidence that the president knew the token's mechanics in advance or benefited financially. On influence peddling, the standard is the exchange of money or favors for access; arranging an introduction, without proof of payment, did not meet it.
This is a defensible reading of the statute, and it is consistent with the earlier procedural history. In July 2026 the judge removed five investors from the case as private plaintiffs, and a federal appeals panel upheld that decision on 4 September. The investors sought reinstatement before Argentina's federal criminal cassation court on 16 September. The dismissal itself was granted under Article 336, Section 3 of the Code of Criminal Procedure, which allows a judge to close a file when the facts do not fit a crime. Complainants with standing can still appeal, so the door is not fully shut.
But the legal standard for fraud is not the same as the economic reality of what happened. A token created minutes before a head of state promotes it, with 70% of the supply concentrated in the hands of the founders, is structurally primed for a pump-and-dump regardless of whether any single participant can be proved to have lied. The judge's finding that the price collapse "alone" cannot prove fraud is correct as law and almost beside the point as market structure: the collapse was the predictable output of the token's design.
Cyclical or Structural: A Political Shock That Will Not Mean-Revert
The first judgment to make is whether this episode is a cyclical political scandal that will fade, or a structural change in how investors price Argentina. The evidence points to structural, for three reasons.
First, the mechanism is reputational and institutional, not just transactional. A president's verified social-media account is a distribution channel with more reach than any paid marketing campaign, and the episode established that such a channel can be monetized by outside promoters who gain access through personal intermediaries. That fact is now public and cannot be unlearned. Future token launches, and any policy announcement that moves crypto-sensitive assets, will carry a discount for the possibility that access was sold.
Second, the forensic record did not disappear with the legal dismissal. The recovered draft contract worth about $5 million and the repeated conversations with the intermediary remain part of the public file, even if they did not meet the criminal threshold. Investors price residual risk, not just adjudicated guilt. Argentina already trades with a high sovereign risk premium; the scandal adds a governance layer on top of the fiscal and inflation risks that Milei's reform program is meant to reduce.
Third, the political polarization around the ruling makes a clean resolution unlikely. The president framed the case as a coup-like operation; the opposition framed the dismissal as proof of a captured judiciary. When both sides treat the same court decision as evidence of the other side's bad faith, the institutional signal is weaker, not stronger. Markets do not calm down when the referee's call is disputed by every player.
The cyclical leg is real but smaller: the immediate legal overhang is gone, and that can produce a short-term relief move in Argentine assets. Relief rallies are cyclical by definition; they fade unless fundamentals improve. The structural leg is the governance discount, and that will not self-correct without visible changes to how officials interact with private crypto ventures.
The Second-Order Question the Market Is Not Asking
The first-order consequence is obvious: Milei's political risk is reduced, and Argentine equities and bonds can rally on the removal of a legal overhang. The second-order consequence is the one most investors are missing. The closure of the case does not close the information gap about who knew what, and information gaps are priced as volatility.
Consider the chain. The event removes a criminal threat to the president. The first-order effect is a lower political risk premium on Argentine assets. The second-order effect runs through two channels. In the domestic channel, the ruling strengthens Milei's hand against the opposition ahead of the next electoral test, which can support reform continuity — a positive for assets if reforms hold. In the external channel, the episode becomes a reference case for how emerging-market leaders interact with crypto promoters, and it raises the scrutiny applied to every future announcement that can move a digital asset. That scrutiny is a tax on the president's most effective communication tool.
The already-priced consensus is that the dismissal is bullish for Milei and bearish for the opposition. The gap is that the same ruling can be bullish for the president's political survival and neutral-to-negative for the credibility of the institutions that underpin the reform program. Those two things can move in opposite directions, and the market is currently pricing only the first.
There is also a cross-asset dimension that most coverage ignores. The memecoin gauge rose 2.9% on the day of the ruling while Bitcoin gained about 0.5% and Ether advanced 0.9%, according to market data. Risk appetite in crypto was already recovering from a technology-led selloff the day before, so the LIBRA news cannot claim the entire move. But the relative outperformance of speculative tokens is the right signal to watch: when the political cost of a head of state promoting a token falls, the supply of such promotions rises, and the average quality of political endorsements falls with it.
The Strongest Counter-Thesis
The strongest argument against this reading is that the legal process worked exactly as it should. The prosecutor investigated for more than a year and a half, forensic examinations were conducted, and an independent judge reviewed the file and found no crime. Dismissing a case for lack of evidence is not corruption; it is the baseline function of a rule-of-law system. By that measure, the episode is evidence that Argentina's institutions can check power, not that they are captured. Ferraro's complaint about the failure to call defendants for formal questioning is a procedural objection, not proof of a cover-up.
This counter-thesis has force. The ruling cites a specific legal standard and applies it consistently to all 11 defendants, not selectively to the president. And the market's immediate read — relief — is the rational response to the removal of a binary tail risk. If the opposition cannot produce new evidence on appeal, the case ends, and the governance discount should shrink rather than widen.
The counter-thesis fails on one point, however: it conflates legal innocence with informational closure. A court can find no crime while leaving the public with unresolved questions about access, intermediaries and a draft contract. Markets respond to both. The falsifying signal is specific and observable: if the Federal Appeals Chamber upholds the dismissal without new evidence emerging, and Argentine sovereign spreads tighten by more than 50 basis points within three months on reform-continuity flows rather than relief trading, then the structural-governance reading is wrong and the episode was priced as a cyclical legal overhang after all.
What Comes Next
The immediate path is an appeal window. Complainants with standing can challenge the decision, and the earlier removal of five complainants by the Appeals Chamber suggests the threshold for participation is being policed. If no appeal succeeds, the criminal file closes.
Short term, the removal of the legal overhang supports a relief bid in Argentine assets: equities listed in Buenos Aires, the Merval, and sovereign bonds that have been pricing political risk. This is a sentiment and liquidity move, and it is fragile.
Medium term, the driver shifts to fundamentals: the fiscal balance, inflation, central-bank reserves and the pace of deregulation. If those improve, the relief rally can become a re-rating. If they stall, the LIBRA episode will be remembered as a distraction that cost credibility without delivering anything.
Long term, the structural question is whether Argentina's governance discount narrows. That requires more than a court ruling; it requires visible boundaries between public office and private crypto ventures, and a record of officials not monetizing access. Without that, every future token or digital-asset announcement will carry a skepticism premium.
Base case: the dismissal stands, the opposition's criticism remains rhetorical, and Argentine assets grind higher on reform continuity rather than on the ruling itself. Upside case: the appeals process ends cleanly, spreads tighten decisively, and foreign capital returns to Argentine bonds on the view that institutions held. Downside case: new documents emerge on appeal, or a future crypto-related announcement repeats the pattern, and the governance discount widens into a broader political risk premium.
The closing line: the court cleared the president of a crime; it did not clear the market of the doubt, and in emerging markets doubt is priced long after verdicts are read.
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