Court orders freeze on assets linked to President Milei’s LIBRA token

Argentine judge Marcelo Giorgi has frozen assets linked to the President Milei-backed LIBRA memecoin scandal. Judge Giorgi ordered a “prohibition of innovation” on properties and financial assets belonging to Hayden Davis and two crypto operators.

Local media reports have disclosed that the precautionary “prohibition of innovation” measure is also in effect for an indefinite period. The two crypto operators have also been identified as Argentine Orlando Mellino and Colombian Favio Rodriguez. Both appear to own crypto wallets that have registered suspicious activity and are currently under judicial scrutiny. 

Federal prosecutor Eduardo Taino requested the precautionary measure. A technical report from the Secretariat for Financial Investigation and the Recovery of Illicit Assets and the General Directorate for Asset Recovery and Forfeiture of Goods of the Public Prosecutor’s Office supports Taino’s request. The report was signed by its heads, Maria Bergalli and Maria Chena. It recommended proceedings against Davis, Mellino, and Rodriguez.

Judge Giorgi grants Taino’s request

Federal Judge Giorgi granted the report’s request to preserve assets that could constitute the proceeds of the fraud against hundreds of investors. It is estimated that investors lost between $100 and $120 million. 

The inclusion of Rodriguez and Mellino in the legal proceedings stems from their involvement as intermediaries in crypto-to-fiat conversion operations. Multimillion-dollar crypto transactions between Davis and the two Argentines involved in the LIBRA case, Mauricio Novelli and Manuel Godoy, also formed part of the suspected money trail. 

Rodriguez was also involved in opening a safety deposit box attributed to Novelli. Novelli’s sister and mother allegedly withdrew bags from a branch of Banco Galicia hours after LIBRA collapsed.

The judge concluded that the requirements of plausibility under the law and the danger of delay were met. Giorgi clarified that he is preventing the consolidation of the proceeds of crime due to the risk that the investigated parties would dispose of the crypto under suspicion before the case is closed. 

The judge also emphasized that the prohibition of innovation will remain in effect for the period strictly necessary to fulfill the purposes of the process. He ordered that his decision be notified to the National Security Commission (CNV) so that it can inform the VASP (virtual asset service provider) and extend the block to all crypto platforms operating in Argentina. 

Davis suspiciously transfers over $500K through Bitget

The prosecution’s investigations found that Davis transferred $507,500 via Bitget just 42 minutes after President Milei tweeted a selfie of the two on January 30. The caption promoted Davis as an advisor on blockchain and AI. 

The prosecution analyzed documents suggesting that these transfers could constitute eventual indirect bribes to public officials. The intermediaries would allegedly have acted as exit ramps for fiduciary money, hindering the tracing of the funds’ real recipients in the shadows. 

The connection between the LIBRA fraud and the corridors of power deepened as documents revealed plans crafted by Argentine Lobbyists. Novelli and President Milei met and discussed the possibility of creating projects to monetize the president’s image three months before LIBRA launched and collapsed. 

Novelli and President Milei reportedly aimed to generate millions in profits. Novelli argued that the image of the libertarian leader constituted a highly personal asset that could be used freely without violating Decree 41/99 or the Public Ethics Law. However, the President’s then-lawyer, Diego Spagnuolo, objected to the business proposal, warning about a possible conflict of interest.

Tensions went through the roof when Davis’s text messages, in which he boasted of his connections and power, were leaked. He sent it to a financier, suggesting an influence scheme and a plan that included the MILEI crypto, which was focused on Argentina. 

“I send money to his sister [referring to Karina] and he signs what I say and does what I want. Crazy.” 

-Hayden Davis, American Businessman 

Meanwhile, plaintiffs argue that the modus operandi was a manual of scams that combined deceptive promotional machinery and secret market control to execute a coordinated rug pull. The scam allegedly drained millions of dollars from retail investors.

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