The recent catastrophic launch of a memecoin backed by the Argentine President Javier Milei illuminates a recurring trend in the cryptocurrency world. Despite the drama, this is not a new phenomenon. Viral memecoins typically surge in value before dramatically depreciating. This strategy is often employed by so-called snipers who buy up new tokens before they become available to the general public. This trend has been further exacerbated by celebrities and key opinion leaders who engage with cryptocurrencies, often on a pay-to-play basis. Notably, two other presidents launched memecoins just this past month.
When former First Lady Melania Trump’s token experienced a similar pump and dump, the world quickly moved on. However, crypto enthusiasts seem less inclined to forget the mess caused by Milei’s memecoin launch. This could be due to the audacity of the operation.
The memecoin, LIBRA, rocketed to a market capitalization of over $4 billion, only to plummet to under $200 million within hours. This drastic fluctuation was even more severe than that of Melania Trump’s token. In the aftermath, high-profile figures in the crypto world admitted to trading based on insider information. Allegedly, Dave Portnoy, CEO of Barstool Sports, was refunded his $5 million investment in LIBRA, a luxury not granted to the average traders who suffered losses.
Unlike most celebrity memecoin launches, this incident had tangible real-world consequences. In an unexpected turn of events, Ben Chow, CEO of the Jupiter-linked DeFi platform Meteora, opted to resign. Despite this, both Chow and Jupiter’s pseudonymous CEO, known as ‘meow’, insist that Chow’s only wrongdoing was a “lack of judgement.” Following this incident, Jupiter announced it would hire tech law firm Fenwick & West to scrutinize the situation.
With a lawsuit pending against Milei, Argentina’s stock market taking a 5% hit, and SOL sinking nearly 20% since Friday, the fallout is palpable. Backlash is mounting on Crypto Twitter, with calls for Solana to refocus on constructive use cases like DePIN.
Yet, while legal teams will undoubtedly profit from the LIBRA debacle, it is unlikely that memecoin trading will suffer a significant blow. Arnold Lee, CEO of Sphere, when asked if the LIBRA aftermath might signal a turning point for memecoins, whimsically replied, “An elephant never forgets, but crypto is not an elephant.”
In essence, while the LIBRA incident has undoubtedly left a mark, it remains to be seen whether it will bring about any lasting change in the volatile world of memecoins.
