LIBRA loses $4 billion: Calls for regulation on politician-backed cryptocurrencies

The LIBRA token, endorsed by Argentine President Javier Milei, was one of the most followed cryptocurrency projects of the year but suffered a spectacular collapse, quickly wiping out $4 billion from its market capitalization. This was a project publicly supported by Milei, but shortly after its launch, investors faced extreme volatility. Analyzing this collapse, cryptocurrency experts believe the incident was largely caused by massive liquidity withdrawals by insiders. At least eight insider-linked wallets withdrew approximately $107 million, leading to the rapid downfall of LIBRA’s value.

In a recent report by DWF Labs, the authors suggest stricter measures to protect investors in politically backed projects. Among the key recommendations are liquidity locking and restricting access for bots and whales (large traders) to prevent market manipulation. Additionally, authorities are encouraged to implement launch rules to prevent unfair activity by entities that can destabilize the cryptocurrency markets.

The LIBRA collapse, which affected 74,698 investors, serves as a harsh lesson for the cryptocurrency industry, which must regain its balance through more careful regulation and the implementation of economic protection mechanisms.