The LIBRA cryptocurrency scandal that erupted last week has sparked political and legal turmoil in Argentina, but two prominent US hedge funds and one of the region’s largest investment banks view the situation as a potential buying opportunity for Argentine assets.
Since the scandal began on February 14, MSCI’s Argentina ETF, which includes stocks with high exposure to the Argentine market, has risen by 1.53%. However, dollar-denominated sovereign bonds have seen declines ranging from 0.8% to 2% over the past five days, despite a moderate rebound on Thursday.
The controversy unfolded when President Javier Milei announced the launch of the LIBRA crypto token on X (formerly Twitter). The token initially soared to nearly US$5 before crashing below US$1, causing significant losses for 40,000 investors, according to Bloomberg News. This prompted legal complaints in both Argentina and the United States. The scandal also led to a political uproar, with the Kirchnerist opposition pushing for impeachment proceedings. Additionally, New York-based Burwick Law is reportedly preparing legal actions on behalf of 200 clients from six countries.
Despite the fallout, the government has denied any civil, commercial, or criminal liability on Milei’s part. Sebastián Maril, head of Latam Advisors and an expert in litigation against the Argentine state, pointed out that filing a lawsuit in the U.S. is relatively easy, but proving jurisdiction, culpability, and damages can be complex.
On Thursday, the ruling party, La Libertad Aviana, blocked the formation of an investigative commission in the Senate. Although 47 senators voted in favour of the initiative, 23 voted against it, and a two-thirds majority was required to proceed.
All of this unfolded against the backdrop of Argentina’s ongoing negotiations with the International Monetary Fund, where the market is expecting concrete developments in the coming weeks.
(Source)