This is the second part of a two-piece series, read the first piece here
The insiders who traded the $LIBRA token with privileged information have been moving funds for at least two months. Phase two of the scam was underway essentially the day after they “pulled the rug” on the $Libra memecoin.
Digital wallets associated to Kelsier Ventures and its now-infamous CEO, Hayden Mark Davis, have been spotted moving millions of dollars across the cryptocurrency ecosystem in what appears to be a series of transactions aimed at covering their tracks and extracting payment. They are also associated to multiple other dodgy crypto operations involving memecoin launches, most notably the $Melania coin. This is one of the beauties of the blockchain, which is ultimately a public ledger where every transaction is visible. Yet that doesn’t mean that it is easy to track the ultimate beneficiaries of the funds – whether it is members of the Davis clan, other crypto insiders or Argentine nationals.
The usual suspects surface if one looks at the characters who interacted with Davis during his visit to Argentina: Mauricio Novelli, Manuel Terrones Godoy, and Sergio Morales. They were the ones who organized the Tech Forum, a B-level crypto conference sponsored by the government which counted on the presence of President Javier Milei. Novelli, Godoy, and Morales — who has direct ties to Presidential Chief-of-Staff Karina Milei, the head of state’s sister — even got Hayden’s Kelsier Ventures to cough up cash in order to sponsor their conference, around $500,000, according to some sources, along with other foreign players such as Julien Peh’s KIP Protocol and Bartosz Lipinski’s Cube Exchange. These three firms are said to have signed differing levels of agreements with the Argentine government through which the future of blockchain, Web3 and artificial intelligence products in the country would be conducted and channeled by these players, all of which are considered to be secondary actors in the space. Hayden’s brother Gideon admitted in a podcast interview (that was successively deleted and then uploaded again) that they had advised Cube and managed to get Milei himself to sign a Letter of Intent (LOI) to lead those initiatives on behalf of the government. La Nación’s investigative journalist Hugo Alconada Mon reported that Kelsier’s deal included an initial payment worth $300,000, followed by monthly installments worth $250,000 for the following six months, with a potential extension for another two-and-a-half years if they secured deals worth $10 million or more for the country. None of these contracts have made it into the public sphere, yet.
Hayden and the rest of the involved parties have gone voluntarily mute. After essentially threatening President Milei, by giving him a 48-hour deadline before liquidating the funds, the CEO of Kelsier Ventures asked the head of state’s entourage to reach out to him, indicating that someone from Presidential Spokesperson Manuel Adorni’s office was expected to get in touch. Indeed, Adorni joined the President in his February trip to the United States to participate in the Conservative Political Action Conference (CPAC), an unusual invitation if compared to previous trips.
Star political advisor Santiago Caputo, the freelancer in charge of the Milei administration’s culture wars, was also brought on board. It wasn’t clear if he was being shielded from the attacks that emerged in the aftermath of his controversial intervention in Milei’s post-$LIbra scripted interview, during which he cut the recording and instructed journalist Jonatan Viale to skip an uncomfortable question regarding the President’s legal strategy. That fragment was later leaked, leading some to believe that it was a purposeful blow by Grupo Clarín, the media juggernaut which recently acquired the local arm of Spanish telecoms giant Telefónica, much to the administration’s disappointment. From a political perspective, Milei’s February trip to Washington was successful in motivating the grassroots followers (in particular his moment in the spotlight when he gave billionaire Elon Musk a pimped-out chainsaw that the head of the US Department of Government Efficiency, or DOGE, exhibited to the crowd). They also secured a shout out from US President Donald Trump, who told Milei paternalistically that he is “proud” of him. It was substantially more successful than Milei’s latest US trip, where he visited Mar-a-Lago to receive an award and supposedly secure another picture with Trump, which ultimately ended in Argentina’s Foreign Minister pulling the delegation amid yelling and name calling. Trump is said to have been surprised that Milei left fifteen minutes before his arrival.
The suspicion of a secret meeting between Milei and Hayden Mark Davis or his entourage remains, even though official sources denied it to Perfil. Initially, Milei’s participation in the $Libra scam was attributed to ignorance but as investigations have progressed, the prime suspect has become Karina, the President’s de facto gatekeeper and Morales’ political boss. These lines of investigation, along with the movement of funds seen on the blockchain, have been aggressively pursued by a handful of investigative journalists, yet Argentina’s Judiciary continues to drag its feet. Yanina Nicoletti, Hayden’s initial defense lawyer, had posted on social media criticizing the investigation led by federal prosecutor Eduardo Taiano for failing to investigate those “truly responsible” for the $Libra scam. Indeed, after initially sitting on the case for a week, Judge María Servini had delegated the investigation to Taiano, who asked the cybersecurity unit of the prosecution to help him preserve any evidence. He’s formally investigating whether Milei, Davis, Peh, Novelli, Godoy, and Morales have committed any crime, an investigation that is disputed by Judge Sandra Arroyo Salgado, meaning there’s a lot going on behind the scenes. Yet, if evidence had to be tampered with or destroyed, the perpetrators had ample time to do so.
Initially, the Milei administration managed to avoid a Senate investigation into the $Libra scandal, while the President had ordered the Investigations Task Force to analyze the case. Interestingly, the taskforce team, which responds to the Executive, was going to be run by María Florencia Zicavo – chief-of-staff to Justice Minister Mariano Cúneo Libarona, the man who Milei initially suggested would defend him in the courts. Suspicions of previously negotiated impunity go further: Prosecutor Taiano’s son Federico is employed by Guillermo Francos, Milei’s Cabinet chief and Interior minister. It all stays within the circle of trust, it seems. Ultimately, the disjointed opposition in the Chamber of Deputies managed to secure quorum and win a vote forcing an investigative committee to be put together. It will be a political ordeal, that’s for sure, but it will remain a thorn in the Milei administration’s side.
Milei has tried to double down, pushing forth with his administration’s agenda. Yet, the loss of political capital has finally hit the libertarians where it hurts. They tried to impose two Supreme Court Justices by decree, only to see the Senate rebuke them. They have been in the eye of the storm for violent repression of street protests. And the peso-dollar exchange rate had begun to get out of control, forcing them to burn through $3 billion in foreign exchange reserves. The recent deal with the International Monetary Fund should give the President some breathing room, as he tries to recover momentum ahead of the midterm elections that will see him confronting not only the Peronist and Kirchnerist segments, but also former President Mauricio Macri, a recent ally. The $Libra crypto-scandal will continue to lurk in the background, popping its ugly face here and there as journalists, crypto-sleuths, or official investigators manage to push the case forward. In the meantime, Milei will try to ignore it as Davis continues to operate in the shadows, under the tacit protection of the Trump administration’s push for deregulation of crypto.
This piece was originally published in the Buenos Aires Times, Argentina’s only English-language newspaper.