Transcript Ep. 785: How the Libra Scandal Exposed Memecoin Insider Trading on the World Stage

Diogenes Casares:

What I think is a little bit hard for these guys to say is that there was a bunch of people that were seeding the LP and they were probably trying to figure out how they wanted to manage the price curve. I find it very hard to believe that they weren't, as a result, relatively intimately aware of how this token was going to work or how the price curve was going to work, and that they didn't take advantage of it at all.

Laura Shin:

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Today's guest is Dio Casares, a crypto trader from Argentina. Welcome Dio.

Diogenes Casares:

Hey. Thanks for having me.

Laura Shin:

We are recording the weekend after the Argentine President Javier Milei promoted a memecoin that he then unposted after numerous insiders jumped in inside on block one. Apparently, this was reported by Conor Grogan of Coinbase . And then it looks like about $100 million was extracted. So kind of a classic example of what looks to have been a pump and dump. This has created a massive uproar in the crypto community as well as in Argentina itself.

Dio, you're both Argentine-American and you happen to actually be in Argentina as all this was unfolding for unrelated reasons. And you wrote a great post on X about your knowledge of the backstory that led up to this launch. So can you tell us what you know of how it got started?

Diogenes Casares:

Yeah. So I basically started getting messages from people that I trade with about two, three weeks ago asking if there was a chance the Argentine government was going to launch a token. For color, they were just kind of like friends of mine, so I didn't think it was that serious. I asked some low-level people, they said there was no way.

And then I got a more serious message from someone I respect a lot, and who tends to be right, who claimed that an official in the government had actually been functionally paid off, whether that's like a bribe or like consulting fee, whatever. And that official, they told me, was very high in the government. They told me who it was, but I'm not going to say it because I don't -- I can't confirm that, and that made me very concerned to the point where I reached out to a bunch of people in the industry in Argentina specifically, and also actually to politicians.

I messaged one of the more known ones is [?] Damian Riedel, who told me that he didn't know about any kind of token that was going to be launched, that there was -- there would be no official government token. And like basically told me it would be all right. So I kind of calmed down, and then it was very much not all right. So that's why I wanted to kind of -- the main reason I wanted to write that article was to show that there was a lot in the immediate moments after it launched, the story was kind of Milei launched a token, when in reality there's this kind of nebulous group behind the token that really kind of functionary took advantage of him and his position.

Laura Shin:

Yeah. Something that was interesting about what you wrote is the point person for all things crypto related in the Milei administration, you said, actually was not aware. So what does it say to you that that person didn't seem to know and yet this happened?

Diogenes Casares:

To me, I think there's a couple different things. One, I think Milei has admitted very publicly that he does not know anything about -- he said in Spanish he's ignorant about all things crypto. So he kind of outsources that a bit to his team. Like just now, right before we started recording this, he retweeted something, because now there's going to be, probably, a trial for him in Argentina. He retweeted a tweet that talked about how hard it would have been for an average Argentine who didn't have a crypto wallet to buy the token.

Not realizing that by doing that because there's also a language barrier here, a bunch of people on Crypto Twitter just see Argentine president retweeting something that says $LIBRA, the token goes back up. So I think it's a mix of like ignorance on that side. And I think, it's also because there was another high up official that kind of was the one to push this. I don't think Milei one day woke up and was like, I'm going to promote this token, or I think I should do this. I think it was someone very close in his cabinet, but it was not a lot of the people that might have had more direct or regular access to people in the industry.

Laura Shin:

So from what you've pieced together, or at least what you wrote, it seems this was more something that was generated within the memecoin community, and in order to make sure that the launch was successful, at least from the perspective of certain parties, basically the insiders, that their notion was that once he tweeted it, that would be what would create the launch, and would make it probably, I guess, profitable for them too.

Diogenes Casares:

Yeah. I actually got a message today from someone at a large VC firm, who showed me a message they actually had with Hayden, who's kind of the guy at Kelsier Ventures, which is functionary is kind of the central piece in getting all of the influencers and people together, and then also trying to influence the Argentine government.

And Hayden -- this was in December, and Hayden was basically saying that he could get -- I'm not going to say it because it had expletives in it, but that he could get Milei to post whatever he wanted if by going through this functionary in the government, and basically paying money, which is -- yeah, that's kind of the main issue there, I think, is that basically it was -- no one in Argentina was really involved besides this one person in the cabinet, potentially, and maybe one or two other people.

And then also the people that were negatively impacted were primarily non Argentines as well. Like if you look on-chain, it was mostly people affected also by Melania or Trump. So there's a lot of like -- yeah. It's a very confusing story because there's a lot of moving parts, and a lot of really weird characters.

Laura Shin:

Yeah. Well, so tell me more about that. Like why is it that you think that there aren't many everyday people in Argentina that were impacted, and why it appears to be more people who are generally into crypto. And then, yeah, let's start there.

Diogenes Casares:

I just think it's a capital thing. Argentines don't have a lot of capital. And what capital Argentines tend to have is very, very, very conservative, if they have it outside of the country. So it's not really the same story as in the US where you have this big memecoin trading kind of community and bigger whales that also participate. That kind of trading culture doesn't really exist at the same level in Argentina. And even if it were to exist, it's a small country in terms of GDP compared to the US or other countries.

Laura Shin:

And so when you looked on-chain, or at least in the piece, it looked more like you were quoting others. But what were you and others piecing together about who it was that participated?

Diogenes Casares:

So I was trying to get an inside track on when this launched. I was working actually with sniping group that was the second transaction into Trump. So they actually had pretty good experience, they were pretty good at finding these things, and they basically missed it, because the ticker was weird and because of a couple other things.

Laura Shin:

What, you mean they missed $LIBRA?

Diogenes Casares:

Yeah, yeah, yeah. Which kind of because of how the wallet was funded. But then if you look at all the wallets that immediately sniped the launch, there was a lot of overlap with Trump and Melania wallets, which again, the guy that I knew about didn't actually know that Trump was going to launch a token. So technically, if his wallet were to be mentioned, people would assume it's an insider. He wasn't actually an insider.

But from what I had heard before, it's roughly the same team that had done Melania, and that has some overlap with Kelsier-Hayden, and then also some of the Meteora guys - Jupiter - Moonshot. And that tends to be kind of -- it tends to be more or less backed up by all of the early transactions that you can see there. And then the later transactions, you can just see that they're mostly very big wallets. You're not seeing very small wallets.

Laura Shin:

Yeah. So by the way, for people who weren't glued to Crypto Twitter this weekend, it's Hayden Davis is the name of the guy from Kelsier. So let's -- since you know this world, like about these memecoin launches, like talk a little bit about how they typically go. Like when we are talking about sniping, that's as far as I understand, getting in very early, like right before the general public usually knows about the coin and taking a large part of the supply. So that way you can basically dump once the price goes up. But tell us a little bit about how this works in terms of -- because as we're all figuring out, like, okay, for each of these, there is a set of insiders.

Diogenes Casares:

Yeah. I mean in general, what the structure appears to be here is that there were kind of multiple different levels, if you're familiar with -- there was kind of -- there were different levels of people that were insiders. There were people that were allowed to seed the Meteora pool, which is basically the liquidity pool for cents and cents and cents on the dollar compared to what the actual price was. Those were a couple larger influencers that had also been involved in Melania. Those were kind of -- I call them like nodes in the sense that they're like a very big character in this community, and then in this community, and then in this community.

So they were kind of prioritized in that way then. Then this has kind of gone over Twitter already, but then there were a lot of larger but not the same kind of level influencers that then got cut into the token by just getting sent the contract address and then buying. That's pretty normal in general for anyone that's launching just a direct memecoin to do it that way. I think where this kind of fell apart was that if anyone read the actual tweet that Milei published, it said very clearly, this is a private company that I think is interesting, which in my opinion was them basically saying like, hey, this is not us, this is not government sanctioned, we're just kind of like promoting it.

So as soon as it started to be promoted as an official government-backed token, that's when basically Milei came in and was like, hey, this has to stop. But what had happened before that, which is that's one thing that's different, but it started collapsing two hours before that. And that was functionary, in my opinion, because Hayden was taking a lot of liquidity out of the liquidity pool. That's the $100 million dollar that kind of came out. He was managing the pool and he was functionary taking out hundreds of millions of dollars or providing one-sided LP, which is literally just a sell order.

So it exhausted basically all of the buy pressure, and left very little liquidity to actually allow for people to sell. So I think that's functionary what actually went wrong. It also -- like these kinds of things are not supposed to leak weeks before they get launched. Like very few people that weren't in the know knew about Melania or knew about Trump. So that's also bad execution for these kinds of things. But I don't think there would have been necessarily an outcome of this that would have been positive either.

Laura Shin:

Like even if they had done it differently with not as many people knowing in advance?

Diogenes Casares:

Yeah. Just with the same cast of characters, I don't think there would have been any outcome that would have been net positive for the country's reputation or for traders.

Laura Shin:

Okay. And why do you say that?

Diogenes Casares:

The Trump token is very different in a reputational perspective, because Trump can do what Trump wants to do. The United States is still the United States. Right now, Argentina is kind of semi-defined by Milei, at least when it comes to public perception. So if you tie a token very closely to him, that hurts his reputation, that hurts him being seen as this kind of incorruptible guy, which in general he's been. It actually has a really bad impact on the country.

And we saw that today, actually the Argentine stock market is down 5.7-ish percent on open, which is probably the first time we've seen such an aggressive impact of crypto hurting non-crypto related stocks. Because, I think, there's a important thing to mention here when it comes to how this has been perceived in Argentina. If you look on Coindesk, maybe Milei is mentioned a lot, on Bloomberg or Wall Street Journal in the US you get one or two mentions, on every single Argentine news site, it is almost every single story right now.

On La Nación, it's like three out of four of the top stories. On Clarín, it's like -- the day it happened, it was seven out of eight of the top stories. Like it's getting an absurd amount of coverage and it's seen almost universally badly by the Argentine public. It's just kind of now people are arguing about, does this mean that someone has to be fired? Does this mean that the President was actually directly involved? That's kind of -- it's actually very interesting because everyone agrees basically that this was bad. What they disagree about is like who's at fault and what should happen next.

Laura Shin:

So I know you may not know the answer to this, but in case you do, I have to ask, do you think that Javier's team, or probably not him, I'm not sure how much he manages things that go on his Twitter feed, but do you think that he or someone in his orbit that was managing this, understood that the tweet itself was publicizing the contract address and that it was effectively launching the memecoin?

Diogenes Casares:

I don't think so. Genuinely, I don't think so. I think that they might have gotten paid to do it. I'm like 99% sure that someone probably did. I don't think they realized that it was basically entirely reliant on that tweet. And I don't think they realized how strongly a tweet like that would tie Milei and the government to that token, if that makes sense, versus it being a separate private company. Like, even in the name. We're not talking about Milei Token, or Karina Token or whatever.

We're talking about $LIBRA, which, if you just look at it on its own, does not seem affiliated. So I don't think they actually realized, but I think that, regardless of that, they should have. And if they didn't, they should basically come forward and explain their thought process, because right now, I think there is -- he's going to get interviewed later tonight, which hopefully should clear up a bunch of things. But it's also, like, it's the first very serious scandal that the government hasn't been able to really just shake, which is interesting and kind of sad that it has to be crypto related.

Laura Shin:

Yeah. By the way, Karina is his sister, who she also has a title in the government, which is?

Diogenes Casares:

I think she's Chief of Staff.

Laura Shin:

Oh, okay. So or at least actually on Wikipedia it says, she's the General Secretary of the Presidency, which maybe it's the same thing. And I did see that Alex Kruger, who is one of the hosts of one of our other shows, Bits + Bips, and is also from Argentina, said Milei's sister could take the fall. She's been his right-hand for years. So well, we'll see how it plays out.

Diogenes Casares:

I don't think Milei's sister will likely take the fall on this, just because he came out very aggressively yesterday, supporting her, going out and talking to people on the street and stuff like that. But very aggressively, probably like 20 plus retweets. I think that was kind of his signal that she's not going to take it. I think it's more likely that they get more in detail on what happened with kind of Hayden and these guys, and they explain kind of what happened. But I don't think that it's sustainable for them to act like there wasn't some -- like this magically got tweeted. You know, there was obviously someone that didn't do their homework.

Laura Shin:

All right. So in a moment we're going to talk a little bit more about the crypto groups that were involved in this. But first, a quick word from the sponsors who make this show possible.

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Back to my conversation with Dio. So you were kind of talking -- I mean, we did talk briefly a little bit earlier about all the different groups that are involved. So some of the names we've already mentioned are KIP, there's Kelsier, there's -- sorry, I didn't write this down, so I'm just blanking. Jupiter --

Diogenes Casares:

There is LA Cabal.

Laura Shin:

Yeah. LA Cabal, Jupiter, Meteora. There's numerous ones. So can you just talk a little bit about -- and even if you don't know exactly what role each of them played for this one, it seems like you generally know kind of how it works. So just break that down.

Diogenes Casares:

Yeah. In general, Hayden of Kelsier kind of guys are kind of power brokers. So they functionary make the memecoin get whatever people to sign off that they need onboard, and then they kind of go and get a bunch of influencers, and people onboard. Large the kind of teams at Meteora, JUP and to an extent, Moonshot now, because JUP just bought Moonshot, although I don't think the original team had anything to do with anything. They tend to get forward notice of these kinds of projects because of the fact that you can almost look at these projects as -- like the JUPs, the Meteoras, et cetera, as intakes for the memecoins.

The memecoin teams kind of need these projects to be ready to kind of accept them and verify addresses, et cetera, so that trades can go through. So they tend to have forward warning, and they tend to push and promote these kinds of things, because they make a lot of money off of fees related to them. Hayden and those guys tend to be much more directly related, and kind of mastermind type. Like the KIP guys, basically, my understanding is were contacted by Hayden to help manage getting connected with the Argentine government. And then from there, almost all of the influencers and everyone that gets brought in, gets brought in via Hayden, and Hayden then kind of outsources it to those people in turn.

So it's very nebulous. It's not like military-organization style. It's very almost a frat boy organization style, but they all kind of have their own interests in this, and they all have their own roles that they play. And the Jupiter, Meteora guys have come out and said that they didn't know, but I find it very unlikely that they didn't know, because they were supposedly also very involved in Melania, and obviously Hayden was very involved there as well. So the overlap is a little --

Laura Shin:

And what about the LA Cabal, which --

Diogenes Casares:

They kind of fall under the influencers in general. They probably didn't know -- no one really -- not a lot of people knew the actual contracted address or ticker. So then they got messaged -- I think there's some videos of this on Twitter. They got messaged right as it launched. So they could buy on stream or publicly and then promote it. But they kind of have an understanding that there's going to be a coin, if that makes sense.

And that's a little bit more mercenary than the people that get let into the LP, because if you're getting let into the LP, you basically can't lose money. It is literally mathematically impossible. But if you're buying into the token no matter how quickly you do it, you now need the token to go up for you to make money. So they kind of -- they have a role of like sure, they buy into the token early, but now they are very heavily incentivized to get more people to buy it, because that's how they make their money.

Laura Shin:

Okay. Yeah. So you wrote in your piece that you felt like what these numerous parties did, that you were calling it insider trading and you said it's illegal, regardless of whether the asset in question is a security or not. People have been convicted of insider trading NFTs and art. This is illegal, extractive, and incredibly dangerous behavior. So I know you're not a lawyer, but talk a little bit about why you were saying that here.

Diogenes Casares:

I have sued people, though, in crypto, specifically before, and I've won. I won a case in Southern District against a DAO. And also I've been very interested in a lot of the cases. It's very, very, very simple. If you have some kind of information that other people don't have, that has a material impact on the asset, you touching that asset in any way, including actually selling the asset -- most people think about it as buying, but say you find out that a company is actually doing really bad, and you want to get out of it, you actually should not sell it because you have information other people don't.

By definition, in that whole explanation I just gave, almost everyone directly involved in this project had some kind of information that other people didn't. That was not publicly available at all. The website was launched the same day, right? So it wasn't you can be like, oh, well, the website was up for multiple days and people could have found it. It was launched, I think, hours before this got launched. It had no SEO presence and it's illegal. It's not often enforced in crypto, but if you know something that other people don't know, and you're taking advantage of that to make money, your insider trading. This is like very, very, very -- it's very black and white.

Laura Shin:

Yeah. Tell me a little bit more about the lawsuit that you pursued against the DAO.

Diogenes Casares:

So I run a trading firm that would do kind of DAO restructuring. We took, alongside a bunch of other investors, had a majority voting share in this DAO, and then basically the founder of the DAO was like, well, I actually don't have to do what you say, even though I said in my white paper that token holders have the right to vote and make major decisions. So we took him to court for that on breach of contract. He was a no-show in court, to be fair, but the judge agreed with the arguments, and we were able to win that case.

We've done similar cases like that. In general, it tends to be DAO related. But in general, when you explain to a judge, you take away LPs, Jupiter, Solana blockchain and you explain very high level what happens, if you went to a judge and you were like, hey, this person knew that a president was going to support penny stock that was related to, or purported to be related to the Argentine economy or government, and as a result bought into it early, or bought into it right as it was launching, because it got confirmed by someone they knew was very trustworthy, or that was an insider in the company, the judge would have no problem saying that's insider trading.

You just change a few of those variables, just because it happens with a token doesn't make it not illegal. It's just that it doesn't tend to get enforced.

Laura Shin:

Yeah. And so by the way, the name of that particular case was Spartacus DAO. So now let's talk about the different statements by these different groups. So there was KIP, interestingly -- so Julian of KIP wrote, the funds are still on-chain and not a single SOL will be moved. Yes, KIP is involved in the project, but our primary role is to help run the fund allocation to the Argentinian companies, unless on the token side, we are not the market maker. So what did you think of that statement?

Diogenes Casares:

Well, first of all, it completely ignores the fact that there were tens of millions of dollars that were transferred from the deployer to private wallets outside of the $100 million that they're talking about. That money, I don't know where it is right now, but that money is probably gone. And that is insider money that got just taken. So that's one thing there.

The KIP statement seems to directly contradict with Hayden statement, who appears to have actual control over the money, where he seems to want to just buy the token back. And was very blatant that the $100 million was not actually raised for small companies as they said it would be. And as they told Milei to say it would be. He just wants to kind of -- he said, put it back into the chart, which is not a great way of phrasing it.

So I think that they're all kind of -- yeah. No, it's not. You can't really talk about accountability and then say, I want to put it the hundred million back into the chart. It's important to realize that a lot of these guys are just pathological liars, and they've been continually outed for lying multiple times, and their stories have continually been changing.

Laura Shin:

Do you have some other examples that you can cite?

Diogenes Casares:

Well, Hayden initially was like, we have the hundred million dollars, we control it, and we're going to do this. And then, earlier today, Dave Portnoy was like -- or whatever his first name is. I don't actually know.

Laura Shin:

Yeah, Dave Portnoy. Yeah.

Diogenes Casares:

Okay. He was like, so who actually owns that money? And Hayden had a breakdown and was like, the country of Argentina. So they don't really have coherent. Like they're just kind of lashing out right now. I think what is clear is that KIP was involved. I think it is clear that the market maker, I really disagree with them calling it market making because it's just providing liquidity, but which is different from market making, but the market maker, i.e., the person who actually has control of the funds, does appear to be Hayden, his family, which is another thing to mention.

Hayden isn't necessarily alone in this. Him and his dad actually were running a consultancy company that was getting money from crypto companies all the way back in, like, December to try and push stuff with the current administration. So Hayden is like, sure, he might be the face, but his dad is also involved.

Laura Shin:

Oh, interesting. And what were they trying to push with the Trump administration?

Diogenes Casares:

No, no, The Argentina --

Laura Shin:

Oh, the Milei.

Diogenes Casares:

Oh, yeah, because I received messages from people that were like, hey, do you know this Hayden guy? He says that you pay him a consulting fee, he manages some things, like very heavily in implying bribery, and that he can get official partnerships with the government.

Laura Shin:

Okay. But is that unrelated to what you wrote about in your Twitter post where you said that there was a lot -- okay,. Because you mentioned that there was at least some point in discussion around launching a completely different token called $afuera, which they didn't end up doing.

Diogenes Casares:

That was different -- that was from a guy who manages one of the larger exchanges here who had basically -- the government here did what they're supposed to do. They bounced the idea off him. They're like, hey, we have this offer, like some of these guys, including, by the way, this guy was very upfront about this, that the JUP CEO was involved in that $afuera token idea.

Laura Shin:

Meow.

Diogenes Casares:

Yeah. Or founder. I don't know if it was CEO or founder, but probably him.

Laura Shin:

Founder. Yeah.

Diogenes Casares:

And I think it's potentially suspicious that they claim not to be related in the current token after hearing that from the local Argentine exchange operator. But, I mean, in theory, it could be that way, but I have the gut feeling that they've been trying to do this for a while, and been trying to kind of go around the normal checks and balances that had been stopping them up until Valentine's Day.

Laura Shin:

Yeah. Just to mention their public statement, the Jupiter Exchange tweeted, "a few members of the Jupiter team knew that there would be at some point a token project associated with Argentinian President Javier Milei. We learned of this about two weeks ago directly from Kelsier Ventures. While we were initially unsure, we then saw credible evidence in the form of public tweets from Milei's personal account that he was serious. That was the full extent of our knowledge. We were completely unaware of the dealings between the principals, in this case, Milei, and the market makers, and were not involved in it in any way, shape or form."

Diogenes Casares:

This isn't written by them, right? They said principals. That's a lawyer's talking and writing a statement for them.

Laura Shin:

Yeah. By the way, right after that, it says, "It was an open secret in memecoin circles that an "Argentina Coin", they put this in quotes, was going to launch at some point, as evidenced by the many public tweets that have since surfaced. But in keeping with our ethos of confidentiality, we did not speak about it with anyone at all, online or offline.  Further, no one on the team received any $LIBRA tokens or related compensation at any time. 

Diogenes Casares:

Yeah. It's a good public statement. I don't think they were heavily involved, but they knew, in my opinion. They just have such a powerful position in the Solana ecosystem, in general, that it's very hard for them to not know. They basically admitted to knowing and then not knowing if it was legit until the tweet, which then makes it public, which then makes it not criminal, which is very convenient. I think --

Yeah, I don't really believe their angle that they had no idea and that none of the team members made money, or that they didn't make some kind of money. Well, I guess they didn't say they didn't make -- they didn't receive any tokens, but they definitely made money as a result of the token from fees.

Laura Shin:

And by that you mean from fees or -- yeah. And just to get it in there, Ben Chow of Meteora also released his own statement, although I don't think it was on the Meteora Twitter page. It was only on his personal Twitter page. But he said, "Meteora and I personally, have never received or managed any tokens on the side, do not receive knowledge or get involved with any off-chain dealings, and we keep to the highest levels of confidentiality for any token launch happening on our platform. To maintain the high levels of confidentiality, very few people in Meteora have access to any launch information. Often, the launch time is only known by me and the token/pool address is only given to me and an on-call engineer or two a few minutes before an actual launch, if at all."  Then it goes on about how all this is permissionless and blah blah, blah.

Diogenes Casares:

So yeah, well, he just proceeded to explain how it was not very permissionless. It's not very permissionless if they're finding out about the launch a few minutes before, and they have an engineer on-call. There's something that -- there's some reason that they need to be informed. So.

Laura Shin:

Yeah. Although actually, so this is getting a little bit off topic, but when I was thinking about all this this morning, I thought, oh, you know what's going to happen at some point, because I would imagine you can code a smart contract that will allow you to launch something without any human knowing what the address is beforehand. And I understand, you would have to -- it would have to be able to interact with different websites and tweets and whatever, but I imagine that you could create something that integrates with all these different platforms so that publicizing it launches everywhere simultaneously. That's probably going to be a thing someday. That's just my opinion.

Diogenes Casares:

Yeah. I'm not super technical, so I can't talk on that side that much. But my understanding, though, is also that because of the nature of the SVM, it's a little bit harder to do it, if that makes sense. Because some code bases are public on GitHub, but not actually -- like there's a bunch of kinds of middleware that you need to actually use in order to interact with the code, which is different than how the EVM tends to work. So it makes it -- and also, for example, the token standard is -- it's not like a standard. It's run by a private company.

Laura Shin:

Yeah. Well, if not on Solana, then on a different chain.

Diogenes Casares:

Yeah, yeah, yeah. But like yeah, I think in theory, to the extent it's possible, it should be possible in -- I think it's already basically possible on Solana, just because of all of the aspects that these teams kind of need, like --

Laura Shin:

Wait, I'm sorry. You're saying it is already possible on Solana? I thought you just said --

Diogenes Casares:

Yeah, just -- well, I'm saying it's hard to do it without interacting with some kind of software that in theory could find out or something, or without a couple assumptions. But what I think is a little bit hard for these guys to say is that there was a bunch of people that were seeding the LP, and they were probably trying to figure out how they wanted to manage the price curve. I find it very hard to believe that they weren't, as a result, relatively intimately aware of how this token was going to work, or how the price curve was going to work. And that they didn't take advantage of it at all. Or at the very least, what -- something they're not saying is that they didn't financially benefit in some way. They're just saying stuff they didn't do.

Laura Shin:

Yeah. Well, it was interesting in that Coffeezilla interview that Hayden Davis did with Coffeezilla. So first of all, he's talking about this dilemma of how they have this hundred million dollars, they don't know what to do with it, blah, blah, blah. And one of the explanations he gave for how they even got it, was that, basically, when these memecoins launch, that Kelsier's strategy was to take some of the money off the table to create a treasury. So that way, basically, as the memecoin is going -- the price is going up and down, they can basically pump it. Yeah, no -- but, yeah, rebuy but also --

Diogenes Casares:

Pump the price.

Laura Shin:

It's both. It's that at least my interpretation was that he was saying was, if we sell a bunch, the price will lower, and then that allows people to buy in at a lower price. And -- so anyway, so the point, I don't know, this is maybe I'm --

Diogenes Casares:

I mean, he's just admitting Coffeezilla to price manipulation functionary.

Laura Shin:

Because he said that this was to protect users. That's the word he used.

Diogenes Casares:

Yeah. I actually, I'm familiar with that to an extent I got into crypto -- I don't mention this a lot, but I actually got into it initially as someone that would help people launch memecoins at the time on ETH and BSC. And there was actually -- that's like a pretty standard practice to take out some of the liquidity or to get fees at the time, because it was SafeMoon Meta at the time where you pay like a tax on every transaction, and the team receives a percentage fee. 

And then when momentum changed, you would buy or you would sell. That doesn't surprise me that much. It is surprising to take out half of all of the cash just to do it. And from what I can see, his point about, like, oh, now people can buy at a lower price. People -- yeah, sure, but then also, there was never a buy from the deployer wallet at any point. In general, when you do something like that, you're selling, sure, but then you're also buying a bit, which, again, that whole process, if you were doing it, was price manipulation inherently, which is illegal, as a reminder.

Laura Shin:

Yeah. One other thing that was funny about this moment was, I think Coffeezilla got overwhelmed when he was like -- because he was saying so much stuff. And I think Coffeezilla was just like, oh, my God. And so what happened was Coffeezilla interpreted it as something like he said, like, oh, so you didn't sell? And then Hayden goes, no, we did sell, it's that we didn't swap. So then he had to correct him and repeat a few times that actually, no, they did sell, it's just they didn't swap.

Diogenes Casares:

Yeah, but I mean, I understand what he's basically saying is they changed how the liquidity pool worked. So it was like a limit order, basically, that was selling in a range, probably. But like he sold. Like sure, they didn't just send it in one transaction. But that's like very tiny detail.

Laura Shin:

Yeah. Well, okay. So obviously now they're in a big pickle. You know, much of the Coffeezilla discussion was focused on -- or and even when Hayden made that video where it was part of their statement, and I'm sure you saw there were so many funny memes about the video. Oh, my God, just thinking about it makes me laugh so hard.

But anyway, so, they have this money, and they don't know what to do with it. And that's when he was announcing all this stuff about how they're going to put it back in the chart and whatever. But I was just curious for your opinion. What do you think is the best way for them to handle this now that they have all this money?

Diogenes Casares:

I think they have like, realistically, two options. They can do a refund, which I think makes the most sense. Or if they actually want to do something with it, they do what they originally said they were going to do, where the money goes towards a fund that invests in small Argentine businesses. And then basically all of the holders have ownership or something. But I think there's a bunch of legal issues with that. But I think those are basically the two options you have. I don't think putting it back into the chart is a good idea.

Laura Shin:

Seriously. I'm so curious also, and you know, you mentioned that you have this experience with the courts. Like do you feel like the likelihood of some kind of legal action against any -- yeah. In Argentina or the US?

Diogenes Casares:

In Argentina, I was actually -- yeah. Not fun. I was actually cited by Cristina Fernández de Kirchner's lawyer, who is a famous politician here, famously stole a lot of money herself. And they're basically bringing a case against Milei. And they cited me as for like, evidence.

Laura Shin:

Your Twitter post?

Diogenes Casares:

Yeah, like extensively. It's like a page.

Laura Shin:

Oh dear.

Diogenes Casares:

So I woke up this morning to that and finding out I might have to testify in Argentine court, which was fun.

Laura Shin:

Oh my Gosh.

Diogenes Casares:

For someone I really don't like. So there's already -- that's already happening. I know that Cristina Fernández de Kirchner's lawyer is like one of multiple lawyers that are probably going to do this. For non Argentine people context, it's about to be like Argentine midterms, right? And Milei just had a fantastic data report in that inflation was really low and poverty actually decreased according to the -- significantly, according to the National Institute for Statistics.

So this is also going to be seized on politically because it's a great way for the opposition to be like, hey, they can't really fight him on the fundamentals, like everything's doing pretty well, but they can be like, what the fuck was this memecoin. So I think it's -- there's going to be a bunch of stuff in Argentina that's already -- there's a bunch that have already said they're going to launch a lawsuit.

I know of people in Argentina that are trying to figure out a way to actually sue some of the KIP people, and to go after Hayden. But I think that takes more time because those are like, with cases within Argentina, it's easier because it's all in one jurisdiction. What makes this really complicated is like, well, say the Argentine government or a trader that lost a lot of money wants to sue Hayden. Do they sue them in Argentina? Do they sue them in the States? If the traders in Singapore, do they sue them in Singapore or do they have to do it in the States because that's where Hayden is. There's a lot of jurisdiction problems that I think are going to be complicated, but I think that'll just make -- it'll just make it take like two or three weeks more and then we're going to see a lot more of these lawsuits.

Like I think there's that one law firm that always publish posts on Twitter, like if you've been impacted by this crypto thing, join our class action. So there's definitely at least one that's going to happen.

Laura Shin:

Well, this reminds me -- you alluded to this earlier in the conversation, but you also mentioned this in your post about how Hayden and maybe his dad are bragging about, or they had bragged about trying to bribe government officials or people close to the government in Argentina. And then you wrote this is illegal under the Foreign Corrupt Practices Act, which is an American law.

Diogenes Casares:

But enforcement has been like, under the current admin, which, by the way, I support the current US admin. I have photos with the big man. But they suspended -- one of the things he ran on was like law and order, and they've suspended enforcement of the Foreign Corrupt Practices Act in the US, which I didn't know. But it is illegal.

Laura Shin:

Oh, Trump.

Diogenes Casares:

Yeah.

Laura Shin:

Okay. Oh, wow. I did not know that they had done that, but they might have done it because they wanted to not have that case go forward against Eric Adams, which --

Diogenes Casares:

That makes sense.

Laura Shin:

Yeah.

Diogenes Casares:

Yeah.

Laura Shin:

Maybe, I wonder if --

Diogenes Casares:

I don't know if they would support Eric Adams, though, because Eric Adams is Democrat, right? I think probably --

Laura Shin:

He's a Democrat, but they -- no. So maybe you don't know this. This is like a fun fact section of the interview. What happened was -- so he's, yes, a Democrat, but he allegedly took bribes from Turkey. And interestingly, what happened is when the current, it's second in command under the Attorney General ordered that the case against him be stopped, the six or seven prosecutors all resigned because they refused.

They said the reasons that you're stating for why you don't want to move forward have nothing to do with the case itself. It's because, I guess, Eric Adams agreed to do I scratch your -- you scratch my back, I'll scratch yours kind of deal, where he said that he would help the Trump administration carry out their illegal immigration initiative or whatever, if the case got dropped.

So the fun fact portion of this is that the first prosecutor who kicked this all off and resigned and refused to go forward with it is the same prosecutor who prosecuted SBF, Danielle Sassoon. She is very famous because she was so expert in the jury room. You know, I watched her in person and all of us reporters were super scared of her because she was clearly so amazing at her job.

But anyway, so I was just like, oh, this is like a interesting intersection of crypto and something unrelated outside of this world. But the point is, I guess, if it's suspended in the US, then maybe it would --

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