Learning from the Milei Scam Case: How to Avoid Scams in Meme Coins

Javier Milei, Argentina’s president, is at the center of a massive cryptocurrency scandal involving $LIBRA, a meme coin that turned out to be a rug pull scam. 

The controversy erupted on February 14, 2025, when Milei endorsed $LIBRA on social media, promoting it as an initiative to fund small businesses and boost Argentina’s economy. 

This endorsement triggered an immediate surge in the token’s value, pushing its market capitalization past $4 billion.

However, within hours, the token collapsed by 97%, wiping out over $100 million in investor funds. Milei deleted his promotional post and distanced himself from the project, claiming ignorance about its details. But evidence suggests otherwise:

• The $LIBRA website was registered only a day before Milei’s endorsement—an indicator of a potential scam.

• The token was created just minutes before his announcement.

• Some crypto insiders had known about the launch weeks in advance, implying Milei may have had prior knowledge.

• After his endorsement, large token holders liquidated their assets, following a classic pump-and-dump scheme pattern.

Also read: The LIBRA Token Scandal: President Milei, Hayden Davis, and Argentina’s Crypto Nightmare

The Milei Scam: What Happened?

This isn’t Milei’s first crypto controversy. In 2022, he promoted CoinX, a platform accused of being a Ponzi scheme, which left investors with significant losses. 

Now, with over 100 criminal complaints filed against him and legal investigations underway, Milei faces serious allegations that could lead to impeachment.

The $LIBRA scandal underscores the urgent need for investor caution in meme coins, an industry often riddled with scams and manipulative schemes.

How to Avoid Scams in the Meme Coin Market

The meme coin market is inherently volatile, with frequent pump-and-dump schemes, rug pulls, and fraudulent projects. Investors must adopt rigorous research and due diligence practices before putting their money into any token.

Key Red Flags to Watch Out For

1. Anonymous or Unverified Teams

Scammers often conceal their identities to avoid accountability. Legitimate projects usually have publicly known developers with verifiable backgrounds.

2. No Clear Utility or Use Case

Many meme coins exist purely for speculation, with no functional use. Avoid projects that lack real-world applications or long-term sustainability.

3. Overhyped Promises and Unrealistic Returns

If a coin guarantees “1000x gains” or “risk-free profits,” it is almost certainly a scam. Legitimate investments carry risk and do not promise instant wealth.

Also read: Libra Coin ($LIBRA) Scandal: Argentine President Milei's Involvement in Alleged Cryptocurrency Fraud

4. Suspicious Tokenomics

Watch out for complex or misleading distribution models and high total supply that artificially inflate the perceived scarcity of the coin.

5. Lack of Transparency and Security Audits

Reputable projects undergo third-party security audits to ensure the safety of smart contracts. If a project has no audits or refuses to disclose its contract code, consider it a red flag.

6. Fake Endorsements and Partnerships

Scammers often fabricate celebrity endorsements or claim partnerships with major companies. Verify these claims through official sources before investing.

7. Liquidity Issues

Low liquidity makes meme coins prone to extreme price manipulation. A project should have locked liquidity for a reasonable period to prevent rug pulls.

8. Hype-Driven FOMO (Fear of Missing Out)

Scammers create urgency to pressure investors into buying quickly without research. Always take your time before making any investment decision.

Also read: What Happens With LIBRA? A Summary of the Scandal

Best Practices for Safe Investing in Meme Coins

1. Conduct Thorough Research (DYOR - Do Your Own Research)

Read the whitepaper and project roadmap.

Check developer backgrounds and previous projects.

Look for active and engaged communities—genuine projects foster transparency and user interaction.

2. Verify Liquidity and Smart Contracts

Use tools like Etherscan or BscScan to analyze the contract code.

Ensure the liquidity pool is locked to prevent rug pulls.

3. Stick to Reputable Exchanges

Avoid buying from obscure decentralized exchanges (DEXs) where scams are prevalent. Stick to trusted platforms like Bitrue and other major exchanges for added security.

4. Be Skeptical of Influencer Promotions

Many influencers are paid to shill tokens without researching them. Cross-check all claims before investing.

5. Start Small and Use Risk Management Strategies

If you’re interested in a speculative project, never invest more than you can afford to lose.

Staying Safe in the Wild West of Meme Coins

The Milei $LIBRA scandal serves as a stark reminder of the risks in the meme coin market. 

As scammers continue exploiting the hype around crypto, investors must become more vigilant and apply strict due diligence before investing.

Meme coins can deliver significant gains, but they are also a breeding ground for fraud. 

The best way to protect yourself is by recognizing red flags, conducting thorough research, and avoiding emotionally driven investments.

If an investment sounds too good to be true, it probably is.

FAQs

1. What happened with the $LIBRA scam involving Javier Milei?

Javier Milei endorsed the $LIBRA meme coin, which caused its value to surge briefly, only to collapse by 97% shortly afterward. Evidence suggests that Milei had prior knowledge of the scam, and the project was manipulated through a classic pump-and-dump scheme.

2. How can investors identify potential scams in the meme coin market?

Investors should watch out for red flags such as anonymous or unverified teams, lack of clear use cases, overhyped promises, and unusual tokenomics. Transparency, proper security audits, and liquidity are essential for safe investments.

3. What are some key warning signs of a rug pull in meme coins?

Suspicious liquidity issues, lack of security audits, misleading tokenomics, and fake endorsements are significant red flags. Projects with no transparency or clear accountability should be avoided.

4. How can I avoid scams and invest safely in meme coins?

Follow best practices like conducting thorough research (DYOR), verifying liquidity, choosing reputable exchanges, and starting small. Ensure you understand the project’s roadmap, smart contract security, and developer backgrounds.

5. Are influencer promotions reliable for investing in meme coins?

Influencer promotions can often be paid promotions with no real research. Cross-check claims from influencers and avoid basing decisions on their recommendations without proper verification.