In what is shaping up to be one of the most dramatic memecoin collapses in recent history, $LIBRA, a token initially linked to Argentina’s President Javier Milei, crashed over 90% within hours of its launch. Blockchain analysts uncovered that insiders cashed out over $107 million, leaving thousands of retail investors with devastating losses.‍

From $4.6 Billion to Collapse in Hours

$LIBRA launched with widespread speculation that it had government backing after President Milei posted a tweet endorsing the project. 

According to The Kobeissi Letter, the token surged to $4.6 billion in market cap in just a few hours, attracting over 50,000 wallet holders. However, blockchain analytics firm Lookonchain revealed that eight wallets linked to the $LIBRA team obtained $57.6 million in USDC and $49.7 million in SOL by adding and removing liquidity and claiming fees.

Further analysis by Bubblemaps showed that rather than selling $LIBRA directly, the insiders used one-sided liquidity pools on Meteora, draining the project’s USDC and SOL holdings while transferring the risk entirely onto retail investors. $LIBRA’s price nosedived more than 90% as $87 million in insider cash-outs wiped out all buy pressure.

According to Bubblemaps, there is still $500 million in assets controlled by the team, which could lead to further liquidations.

‍Milei Deletes Tweet, Denies Involvement

Following the collapse, Milei deleted his promotional tweet and distanced himself from the token. In a statement posted on X (formerly Twitter), Milei claimed he was unaware of the project’s specifics before promoting it and had “no connection whatsoever” to its development.

"I was not aware of the details of the project, and after learning more, I decided to stop spreading the word," Milei stated. He also accused his political rivals of attempting to exploit the situation.

His response, however, did little to calm investors. According to The Kobeissi Letter, the $LIBRA website was created only hours before the launch, with a one-year registration period and no verifiable ownership information. Additionally, it contained a Google Form for users to “apply for funding”, raising further suspicions about its legitimacy.

As backlash grew, Tron founder Justin Sun weighed in on the controversy, urging Milei to take responsibility.

"I have great respect for President Milei, but he should take some responsibility in this matter, urging the culprits to return the funds to the victims and assume legal responsibility," Sun posted on X.‍

Memecoin Market Faces a Liquidity Crisis

The collapse of $LIBRA triggered broader instability in the memecoin sector. According to The Kobeissi Letter, the $TRUMP memecoin, associated with former US President Donald Trump, lost $500 million in market cap as traders scrambled to exit risky assets.

In total, more than $6 billion in market cap was erased from the broader memecoin market in just three hours, as uncertainty and fear spread among investors.

With evidence of insider manipulation and political speculation fueling the hype, the $LIBRA rug pull serves as a cautionary tale for retail investors chasing high-risk memecoins.

The $LIBRA debacle has left a massive dent in investor confidence, with analysts questioning whether memecoins can recover from this crisis. With billions wiped out in hours and high-profile political figures inadvertently fueling speculation, the era of memecoin mania may be facing much greater scrutiny.