The Brooklyn Rail

Javier Milei, president of Argentina, is at the center of a storm for promoting the $LIBRA memecoin. Let’s briefly review the facts: On Friday, February 14, 2025, $LIBRA was created with a website that as the only information supplied a contact email. At the time of its launch, 82 percent of the tokens were controlled by just five digital wallets. This memecoin has no backing in real value; there was not even moderately clear knowledge of who its creators or what its purposes were. The domain of the site vivalalibertadproject.com was dated the same day $LIBRA was created.

In the light of these facts, there was no way for the price of the memecoin to take off. However, three minutes after the launch of $LIBRA, Milei posted a tweet, "Long live the Freedom Project," that linked the token to policies for the development and promotion of small Argentine companies and entrepreneurs. The link was based on fantasy, as it was not even explained how this project would be effected or who would lead it. But this didn't matter to investors. With Milei's tweet, the price of $LIBRA skyrocketed from $US0.25 to $5.2. Its market capitalization rose to 4.5 billion dollars (although this was fictitious, as only a small number of the total tokens circulated). When the price reached US$5, there were sales of US$1.5 billion and the price collapsed to US$0.2. After midnight, Milei deleted the tweet and tweeted that he had no information on the details of the project.

The results were large losses for many investors—more than 70,000 dollars, according to some estimates—and about 80 million dollars in profits for insiders (who operated on the basis of privileged information, which is illegal), who were the holders of most tokens. It was what is called in the crypto world a rug-pull scam: developers create a memecoin; agree with an influencer—preferably a celebrity—to promote it and raise its price; and then sell it massively (pulling the rug), taking massive profits. The influencer (for which an economic remuneration is usually arranged) is the key to the success of the scheme.

In the case of $LIBRA, the influencer was none other than the president of Argentina, who, to make things even more scandalous, presents himself as an expert in economics. That is why constitutionalist Gil Domínguez says that Milei’s behavior is at odds with public ethics and implies several types of criminal acts. The defense made for Milei, who said to be acting just in his personal capacity, “has no legal substance,” Dominguez said. The reality is that Milei's posting concealed the true content of $LIBRA (it has no real value) behind the screen of a development project for the Argentinian economy. I emphasize that there was not the slightest reference to or explanation of how the projected economic “progress” could come about. Milei was therefore a necessary participant in the fraud.

Everything indicates that the promotion (“dissemination,” Milei calls it) of $LIBRA was arranged in meetings with an American, Hayden Davis, president of Kelsier Ventures, co-creator of $LIBRA and responsible for its launch; and with Singaporean Julian Peh, CEO of KIP Protocol, who developed the project “Libertad.’’

Milei met with Davis on January 30, 2025, at the Casa Rosada (the headquarters of the Argentinian government). Davis himself explained that Milei had agreed to support the token but had then backed out, unleashing panic and investor withdrawal (in reality, Milei deleted his promotional tweet when $LIBRA had already collapsed). The takeaway: it is quite likely that there was a prior agreement to promote $LIBRA. This means the head of state supported an operation buoyed by insider information. There is no other way to interpret it, especially since it involved Davis, an “expert” who has taught courses for traders in cryptocurrencies.

As for KIP Protocol, the creator of Viva la Libertad Project, Milei met Peh at a Tech Forum LATAM event in October, 2024. Days after that meeting Peh uploaded to the web a note entitled “Historic moment for KIP: the LATAM expansion takes off in Argentina.” The message claimed that these crypto operators were intervening at the service of Argentine economic development. Peh also had extensive meetings with Karina Milei, the president’s sister, in the presidential residence, Olivos, and in the Casa Rosada.

Also noteworthy is the role of Mauricio Novelli and Mauro Terrones Godoy, who put Davis and Peh in contact with the government. Novelli and Terrones Godoy organized the October Tech Forum, with Milei as the main speaker. This provided the occasion for a meeting that was destined to go almost unnoticed. On the other hand, Milei taught courses for traders, organized by Novelli’s N&W. In November 2023, as president-elect Milei gave a talk (posted by Novelli on Instagram) recommending these courses. In addition, during the last year Novelli met repeatedly with Milei and his sister. According to La Nación, between January and September 2024 he had at least nine meetings. And Novelli was the sponsor of Milei's Instagram account while he was an MP.

Davis has said he paid coimas (bribes) to Karina Milei in order to influence the president's decisions. Diogenes Casares, an expert in cryptocurrencies and co-founder of Stream Finance, also spoke of bribery and illicit payments to national government officials to induce Milei to promote $LIBRA. Charles Hoskinson, the businessman who created Ethereum and Cardano, reported that he was asked for money to meet Milei during his visit to Argentina in 2024. Journalist Cristina Pérez (wife of the current Minister of Defense, Luis Petri) denounced officials close to the President for charging money to arrange meetings. According to Pérez, “at least three different sources told me about situations of this kind.” All this brings to mind the 2023 denunciations of the sale of candidacies on the ballots of Milei’s political party La Libertad Avanza. These sales were justified by Milei, who claimed that “La Libertad Avanza is financed by its own efforts.”

Milei cannot claim ignorance of what the world of crypto is or how a Ponzi scheme works, given the courses he taught as Novelli's consultant and his previous forays into the field. Two stand out: Vulcan and COINX. In 2021 Milei, promoted the token of the video game company Vulcano, which was run by Novelli. His assurance that it was “a project that unlike the vast majority of these projects is sustainable in time” induced people to invest in it. Shortly after Milei’s statement, the $VULC price fell to zero. There were allegations of fraud, but the matter was not investigated. Then, in 2022, when he was already an MP, Milei recommended investing in COINX, a cryptocurrency platform. The company offered monthly earnings of 5 to 8 percent, in dollars. Such yields indicated a Ponzi scheme. But Milei recommended COINX because, he said, “they are revolutionizing the way we invest to help escape inflation ... Mention me when you write them so they give you the best advice.” Many people trusted the libertarian expert and lost a lot of money. The National Securities Commission eventually shut down COINX.

All this leads us to locate Milei and his circle socially in what Karl Marx called the lumpenbourgeoisie. In an interesting article published in 2018, the Cuban-American Marxist Samuel Farber applied this concept to the current president of the United States, calling him a “lumpen capitalist.” Farber explained:

In his Class Struggles in France, 1848–1850, Marx wrote that the finance aristocracy of that time “in its mode of acquisition as well as in its pleasures, is nothing but the rebirth of the lumpenproletariat on the heights of bourgeois society.” Marxist scholar Hal Draper clarified that Marx’s “finance aristocracy” did not refer to the finance capital that plays an integral role in bourgeois economy, but to the “vultures and raiders” who swing from speculation to swindling and who are the near criminal or extralegal excrescences from the body social of the rich just like the “lumpen proletariat” proper are excrescences from the poor (my emphasis).¹

Indeed, in The Class Struggles in France Marx described the financial aristocracy that dominated the French government and enriched itself with speculation, the scams to the state, the deficit and the periodically renewed borrowings, the stock exchange operations:

Each new loan gave a further opportunity, that of plundering the public which invested its capital in state bonds by means of stock-exchange manipulations, the secrets of which the government and the majority in the Chambers were privy to. In general, the instability of state credit and the possession of state secrets gave the bankers and their associates in the Chambers and on the throne the possibility of evoking sudden, extraordinary fluctuations in the quotations of government securities, the result of which was always bound to be the ruin of a mass of smaller capitalists and the fabulously rapid enrichment of the big gamblers … The enormous sums which in this way flowed through the hands of the state facilitated, moreover, swindling contracts for deliveries, bribery, defalcations, and all kinds of roguery.

Scams were also common at the level of public works, and the construction of railways was another source of speculation, fraud, and enrichment.

The concept of the lumpenbourgeoisie was used by Marxist and heterodox authors associated with the dependency school. However, I am using the term differently than Paul Baran or André Gunder Frank in the third quarter of the past century. Baran used it to refer to the absorption by the commercial class of part of the surplus of landowners and foreign and industrial companies. That surplus, Baran continued, was utilized not in production, but in accumulating rent-producing land, in import and export businesses, in money lending, and in speculation. In this way the lumpenbourgeoisie was a parasitic stratum that blocked capital accumulation (see Baran’s The Political Economy of Growth of 1957).

Gunder Frank baptized as lumpenbourgeoisie the social class which, in underdeveloped countries, was an instrument of foreign industry and trade and took advantage of continued economic backwardness. The lumpenbourgeoisie was the subordinated partner of imperialism and opted in its own interests for policies that deepened the subordination to and dependence on imperialism, renewing “lumpendevelopment,” or underdevelopment. Fundamentally, it was not based on the exploitation of its own proletariat (see Frank’s Lumpenbourgeoisie, lumpendevelopment: Dependence, Class, and Politics in Latin America of 1972).

Many people on the left still use the term in this way. But from my point of view, Milei and his group fit better into Marx’s characterization of the lumpenbourgeoisie. Essentially, it is a fraction of the bourgeoisie that seeks to enrich itself on the basis of speculative maneuvers, state use, fraud with public works, etc., but from a position not subordinated to foreign capital—neither to Washington nor to the IMF. In other words, it is not a faction of the ruling class that operates as a mediator of a colonial relationship. Moreover, fraud and corruption operations may involve both sectors of the so-called “national and popular camp” (people such as the Kirchners and Lazaro Báez), as well as on the political right wing, and the far right. Everything depends on what relationships to the State they can manage at any given time. Their income is part of the surplus value generated by the productive labor of a country, but they do not obtain it from the direct exploitation of the workers. They are experts not in running capitalist companies, but in all kinds of embezzlement, with an unparalleled shamelessness.

Milei is an extreme case of the twenty-first century lumpenbourgeoisie. This group is not working for foreign colonial powers, as the left often says; it operates in connection with a capitalist class with its own roots, and an independent state. And from that position the lumpenbourgeoisie has its share of globalized financial capital, with, for example, accounts in tax havens, real estate investments, casinos, and hotels to launder money, and engages in concerted operations with other elements of the globalized lumpenbourgeoisie (for example, those dedicated to cryptocurrency scams).

Given its social characteristic—its maneuvering to appropriate surplus value without owning the means of production or assuming the functions of an active capitalist, the lumpenbourgeoisie usually maintains relations to some extent contradictory to capital in general. The absence of roots in the capitalist relationship itself, its adventurous character, unlimited opportunism, everything leads them to be unpredictable elements for the bourgeoisie and, at a certain point, even dysfunctional for the businesses of capital. For example, Farber points out that Trump has been a chronic breaker of the “normal” rules of political comportment essential to the function of being a trusted and reliable arbiter to intra-capitalist conflict. He has ignored many of the political rules of the game, especially those that maintain the “civility” regarded as essential to political stability and the harmonious alternation in power between Republicans and Democrats.

At the economic level, measures such as the imposition of high tariffs on imports encounter resistance in sectors of capital that are stronger and more globalized. The questioning of Trump by the likes of The Wall Street Journal and The New York Times expresses that distrust. As Farber writes, “Trump’s political conduct is an impediment to the most important political function of the capitalist state: acting as a unifier and arbiter of the capitalist class.”

Some of this applies too to Milei and his minions. Milei is functional to the capitalist class—insofar as he applies the adjustment, lowers the wages of civil servants and pension payments, facilitates the flexibilization and elimination of work regulations, advocates individualism, etc.—but has a tense relationship with many positions that are considered more or less normal or acceptable in the establishment. For example, when Milei announced that Argentina would withdraw from the Paris Agreement on Climate Change (signed by former president Macri and 196 countries), he did not necessarily express the interests of capital in general. Something similar can be said about Argentina's abandonment of the World Health Organization, attacks on homosexuals, the proposal to erase the legal concept of femicide, the proposal (now dropped) to eliminate the Central Bank, the sale of positions on electoral ballots, or the demand for coimas to have access to Milei, just to mention some significant examples.

To conclude, I want to repeat what I wrote in a 2013 note on the social conditions underlying corruption: It should never be ignored that capitalist society tends to the commodification of all relationships. That is why, ultimately, virtues and decency, including votes of parliamentarians, and court rulings, are bought and sold, like any other commodity … The sad slavery to which money subjects the bourgeois clearly filters into the very language of the bourgeoisie. It is money that gives value to people … Whoever has money is respectable, he is part of “the best kind of people” (Friedrich Engels, The Condition of the Working Class in England, 1845). Money “is the visible divinity—the transformation of all human and natural properties into their contraries, the universal confounding and distorting of things: impossibilities are soldered together by it … It is the common whore, the common procurer of people and nations” (Marx, Economic and Philosophic Manuscripts of 1844) What do I care about people without work or wealth? What do I care about all this, if I get rich overnight? What do I care if money turns loyalty into felony, love into hatred and hatred into love, virtue into vice and vice into virtue, the servant into lord and the lord into a servant, stupidity into talent and talent into stupidity? This is bourgeois civilization in action and is the ultimate reason for widespread corruption.