$LIBRA: From the Technological Object to the Architecture of Fraud
Can an asset's technological label ("memecoin") exclude fraud in advance? The ruling that expelled the private complainants from the $LIBRA case rests on that methodological error. On why criminal law must assess the induced representation, not the investment object.
Editor's Note. Although this article discusses the Argentine $LIBRA litigation, its central claim is methodological rather than jurisdiction-specific. The legal classification of technologically novel assets should not determine, by itself, the criminal-law analysis of the conduct carried out through them. The comparative references to U.S., German, and Spanish law are intended to illustrate that distinction across different legal traditions.
The legal problem in the $LIBRA case is not whether a memecoin is risky. It is whether the technological classification of the asset suffices to exclude, in advance, the possibility of fraud.
The distinction is not rhetorical: it is methodological. Although this analysis is grounded in Argentine criminal law, the methodological distinction it develops is not jurisdiction-specific and finds close analogues in comparative fraud jurisprudence. The technological classification of an instrument (memecoin, token, cryptocurrency) does not by itself determine the legal classification of the conduct deployed through it. Criminal law does not classify technological objects; it assesses conduct that harms legally protected interests. The correct analysis therefore does not start from the informatic nature of the asset, but from the legal structure of the transaction into which that asset was inserted: who induced what representation, by what means, and what disposition of property was obtained as a result. The ruling issued on July 3, 2026 by federal judge Marcelo Martínez de Giorgi in case CFP 772/2025 does exactly the opposite: it treats the asset's technological classification as excluding the possibility of fraud. This article examines that displacement and its consequences.
I. The July 3 ruling: scope and problems
Formally, the judge granted a motion asserting lack of action (excepción de falta de acción) filed by the defense of Mauricio Novelli —one of the principal defendants— and removed Juan Patricio Marchetto, Alan Vega, Matías Alejandro Paris, Braian Emanuel Quintero and Martín Romeo from their role as private complainants (querellantes: under Argentine criminal procedure, victims admitted as autonomous prosecuting parties alongside the public prosecutor). The central argument: the investors had allegedly failed to establish a direct, concrete and individualized injury, or to reliably prove ownership of the virtual wallets with which they purchased the token.
The reasoning presents three difficulties.
First, evidentiary circularity. The ruling requires the complainants to prove ownership of their wallets, the origin of their funds and the causal link between the alleged scheme and the harm — when those very findings are the object of the technological and accounting expert examinations that the case file has not yet produced. The ruling itself acknowledges that the investigation has not managed to reconstruct the traceability of the funds or identify the wallet holders; yet from that incompleteness —attributable to the investigating State, not to private parties— it derives the exclusion of those who claim to be victims. An investigative burden that belongs to the state apparatus is thus shifted onto the injured parties, and the evidentiary standard of a procedural incident is raised to a level approaching that of a judgment on the merits.
Second, tension with procedural preclusion. The five complainants had been admitted at the outset of the proceedings, and their standing was confirmed by the Federal Court of Appeals of Buenos Aires. Reopening that discussion at the request of a defendant, without substantial new facts and with the investigation still incomplete, compromises the stability of settled decisions within the proceeding.
Third, anticipation of the merits. Although the ruling presents itself as an incident on standing, the judge characterizes $LIBRA as a memecoin (a highly volatile, lightly regulated asset whose value depends on participants' perception) and infers from this that the losses do not permit a presumption of typical injury. He adopts, in other words, the central premise of the defense's theory of the case before any indagatorias (formal examinations of the accused), witnesses to the operation, or completed expert reports exist.
The practical effect is significant: the criminal action is left exclusively in the hands of prosecutor Eduardo Taiano, whose performance has been questioned for its delays (to the point that a special congressional committee requested his removal) and whose own Public Prosecutor's Office acknowledged in the case file that it lacks the budget and technological tools needed to analyze the wallets. Without complainants entitled to push for evidentiary measures, request examinations of the accused, or appeal, the pace of the case comes to depend on a single accuser with declared operational difficulties.
To this must be added a fact that cannot be omitted from the institutional analysis: the temporal coincidence between the ruling and the appointment process of a direct family member of the judge by the same Executive branch whose conduct is under investigation makes especially relevant the doctrine of objective impartiality developed by the European Court of Human Rights (Piersack, De Cubber) and adopted by Argentina's Supreme Court in Llerena (Fallos 328:1491) — which, in such a context, would preclude the judge from intervening. This is not to assert an exchange of favors, but to recall that the guarantee of an impartial judge also requires that impartiality be verifiable from the perspective of a reasonable observer.
II. First error: the object. $LIBRA did not operate as an ordinary memecoin
The ruling's first misstep is to confuse the informatic taxonomy of the asset with its economic and legal function in the concrete case. A traditional memecoin (Dogecoin, Pepe) has no roadmap, no promises of returns and no corporate structure; its value fluctuates on pure community sentiment, and whoever acquires it knows they are buying a ludic or collectible asset.
$LIBRA, by contrast, was structured and communicated as an investment opportunity with a declared purpose. The "Viva la Libertad Project" website operated as the hub of a purported scheme to finance small Argentine businesses and ventures, which were to apply and be vetted within the ecosystem itself. Users were not invited to acquire a digital entertainment object, but to inject capital into an infrastructure that promised a return tied to the development of real economic projects. There was, in substance, a public and massive solicitation of investments: a delivery of money to a common enterprise with an expectation of profit derived from the efforts of others — the material definition that comparative law has used, since the Howey test, to examine the economic substance of a transaction regardless of its wrapper.
The "memecoin" label is therefore not a neutral datum: it amounts to adopting in advance the description of the facts proposed by the defense, which needs to reduce $LIBRA to a speculative game in order to dissolve the potential deception into market risk.
III. Second error: the focus. The investment object is not the induced representation
The second error is deeper, because it concerns not the description of the asset but the method of analyzing the criminal offense. The ruling examines the object of the investment — its nature, its volatility, its lack of regulation — when the analysis of fraud (Article 172 of the Argentine Criminal Code) requires examining the representation induced in the investor.
The distinction is central to the doctrine of Article 172. Fraud does not depend on the negotiated object existing, being lawful, stable or valuable; it depends on the perpetrator having generated, through a suitable artifice, a false representation of reality that determined the disposition of property. One can defraud with real properties, duly incorporated companies, authentic securities and of course, with tokens that genuinely exist on a blockchain. What the offense interrogates is not the object but the mise en scène: the staging that classical Argentine doctrine (Soler, Núñez, Donna) identifies as the core of the artifice.
From that standpoint, the question is what representation was induced in those who bought $LIBRA. The answer emerges from objective, verifiable and concordant elements available to the investigation:
the design of the "Viva la Libertad Project" platform, which presented the token as a vehicle to finance the Argentine economy and generated the appearance of a structured investment project, with application and vetting of ventures; the presidential post that publicized the project at the exact moment of launch, including the precise link to the token's smart contract (a decisive technical detail, because in crypto operations the contract address is the key to purchase: whoever disseminates it is not commenting on a phenomenon, but channeling the investment); the platform's name, modeled on the official political slogan, and its declared purpose of funding Argentine projects, which fused the private initiative with the public office; and the previously documented meetings between the President and the developers, recorded in official audience logs, which contradict the subsequent claim of unfamiliarity.
Taken together, these facts are consistent with the typical structure of fraud by inducement of error through a false double quality: that of a highly profitable private venture and, simultaneously, that of a project with quasi-institutional backing. This is not to assert an adjudicated fact (that belongs to the very proceeding now being narrowed) but something more limited and sufficient: that a serious accusatory hypothesis exists, supported by multiple, precise and concordant indicia, which the investigation had a duty to exhaust before any pronouncement weakening it.
Two clarifications reinforce the point. First: this is not a case of crude attribution of nonexistent influence (a scenario in which case law denies the artifice suitability) but of the exploitation of real, public and verifiable backing by the highest office in the land. It is settled criminal case law that the victim's possible credulity does not exclude fraud when the artifice was objectively suitable, assessed in concreto; and it is hard to imagine a comparable enhancer of suitability than the personal endorsement of the head of State. Second: no act of the President of the Nation concerning the economy and the country's development platforms can be deemed performed strictly "in a personal capacity." In a hyper-presidentialist design, the head of State's statements generate legitimate expectations vis-à-vis third parties acting in good faith — all the more so when the project invoked Argentina itself as its global launch platform. The distinction between a "personal" account and the presidential office is, as against those third parties, legally unopposable.
The subsequent sequence is equally relevant to the hypothesis: the early withdrawal of funds by a small group of wallets positioned in advance, the price collapse within hours, the deletion of the presidential post, and the claim of not knowing the developers despite the recorded meetings. The retraction does not close the criminal analysis; on the contrary, it constitutes an additional indicium the investigation must weigh, because whoever disseminated the contract link after personal meetings with its creators can hardly claim detachment from what he promoted. It should also be recalled that the fraud hypothesis does not exhaust the case file: hypotheses of negotiations incompatible with public office (Art. 265 of the Criminal Code) and bribery remain pending, arising from alleged payments linked to presidential access.
IV. The Market Risk Fallacy: Why Volatility Never Absolves Fraud
The case should be situated within a broader framework. Throughout the history of financial fraud (with stocks, bonds, trusts, savings schemes, NFTs or cryptocurrencies) the same defense recurs: the investor knew the instrument's risk, and the losses are therefore attributable to the market. And in every one of those fields the doctrinal answer has been identical: the risk inherent to the market never excludes the fraud that preceded the assumption of that risk.
The reason is structural. Market risk operates upon informed decisions: whoever buys a volatile stock assumes the volatility of what they believe they are buying. Fraud, by contrast, operates earlier: it vitiates the representation on the basis of which the investor decided. If the decision to invest was induced through a false staging (simulated solvency, apparent institutional backing, a nonexistent purpose) the asset's subsequent fluctuation does not purge the initial deception; at most, it determines the magnitude of the injury. This is why economic criminal law sharply distinguishes between market loss (non-criminal) and disposition of property obtained through induced error (criminal), even though both appear, from the outside, as the same negative balance in the investor's account.
This distinction has been developed with particular clarity by German criminal-law doctrine, especially in the treatment of risk transactions (Risikogeschäfte) and property fraud (§ 263 of the Strafgesetzbuch), which distinguishes between the risk inherent to the investment (Anlagerisiko) and the risk created by an antecedent deception. The former belongs to the sphere of private autonomy: whoever invests assumes the normal fluctuations of the market. The latter arises when the decision to invest has been determined by a false representation constructed through an artifice, so that the disposition of property carries risks foreign to those inherent in the transaction, concealed or distorted by the perpetrator. In that scenario, the error precedes the assumption of risk and vitiates the disposition from its origin: under the prevailing criterion in German case law, the injury is assessed at the very moment of the disposition (by the difference between what was received and what was represented) so that the asset's subsequent evolution does not erase that initial defect; it bears, at most, on the extent of the harm. The German system reinforces this logic with a specific offense of fraud in the solicitation of capital (Kapitalanlagebetrug, § 264a StGB), which punishes the dissemination of misleading information addressed to a broad circle of investors without even requiring proof of injury — precisely because the protected interest is the unvitiated formation of the investment decision. Conflating these categories shifts the analysis from the perpetrator's conduct to the characteristics of the instrument used: exactly the methodological error this case lays bare.
Applied here: that memecoins are structurally volatile is a true and irrelevant fact at once. The criminal question is not whether $LIBRA could fall (they all can) but whether those who promoted it induced a false representation about what $LIBRA was, who backed it, and what it was for. The reference to the instability of the crypto business, invoked first by the promoters and later adopted by the judicial ruling, singles out an external and subsidiary feature of the instrument to avoid examining the conduct.
V. Comparative law: economic substance over technological wrapper
Courts in the leading jurisdictions have uniformly rejected the argument that shifts the axis toward crypto-market volatility.
· United States: SEC v. Shavers (2013) and the Howey test
In SEC v. Shavers (E.D. Tex., 2013), the federal court in Texas adjudicated the Ponzi scheme built on the Bitcoin Savings and Trust platform. The defense argued that, since bitcoin was neither legal tender nor regulated, securities laws did not apply and users knew the ecosystem's risks. The court rejected the argument, applying the test of SEC v. W.J. Howey Co. (1946): an investment contract exists where there is an investment of money (or convertible assets) in a common enterprise with a reasonable expectation of profits derived from the efforts of others. The novel or informal character of the asset does not immunize promoters against financial-fraud rules: the court examined the economic substance of the operation, not its wrapper.
The standard remains fully in force in the $LIBRA case itself: a class action by injured investors is pending before the U.S. District Court for the Southern District of New York against Hayden Davis (Kelsier Ventures) and Ben Chow (Meteora), examining whether there was a scheme designed to inflate the token's value, attract investors and allow the early withdrawal of funds by insider wallets and in which the presidential posts are identified as the factor that legitimized the project. The contrast with the Argentine jurisdiction, which has just excluded from the case file those who claim to be victims, is itself a datum for analysis.
· Spain: the Arbistar case and volatility as an accessory feature
Spain's Audiencia Nacional followed an analogous criterion in the Arbistar 2.0 case, one of the largest crypto-asset frauds in the Spanish-speaking world. The perpetrators raised massive funds by promising extraordinary returns through purported automated arbitrage software; when the scheme collapsed, they sought to attribute the losses to the systemic instability of cryptocurrencies. The investigation discarded that line: volatility and decentralization are accessory features; what was criminally relevant was the staging (the promise of an infallible system combined with an intense campaign of social legitimation) that induced the disposition of property. Criminal law protects property against the agent's intent to deceive, whether the vehicle is a traditional contract or a token on a blockchain.
VI. Conclusion
What this case demands of legal analysis is a shift of focus: from the technological object to the architecture of fraud. The July 3 ruling travels the opposite path: it derives the improbability of the offense from the taxonomy of the asset (or, put differently, it uses the asset's taxonomy as a methodologically unsound ground for weakening, in advance, the typical plausibility of the accusatory hypothesis), it demands from the alleged victims the evidence the proceeding itself was supposed to produce, and which the State concedes it cannot produce for lack of resources, and, on that basis, it reduces the prosecution to a single actor with declared operational difficulties.
The assembled elements: the investment platform with a declared purpose, the presidential dissemination including the precise smart-contract link, the identity between the project's name and the government slogan, the documented prior meetings, the early withdrawal of funds and the subsequent denial, are consistent with the typical structure of fraud under Article 172: a suitable artifice, induced error, a false double quality, a disposition of property and the resulting injury. Whether that hypothesis is confirmed is the task of a complete investigation, with expert reports, witnesses and examinations of the accused; not of a procedural exception resolved before producing them. The appeal before the Federal Court of Appeals, the same court that had already upheld the complainants' standing, will offer the opportunity to restore the proper analytical framework: judging the conduct, not the wrapper.
References
Argentine Criminal Code, Law 11,179 (as amended), Arts. 172 and 265.
German Strafgesetzbuch (StGB), §§ 263 (Betrug) and 264a (Kapitalanlagebetrug); doctrine on risk transactions (Risikogeschäfte) and investment risk (Anlagerisiko).
T. Fischer, Strafgesetzbuch mit Nebengesetzen, C.H. Beck, Munich, commentary on § 263 (esp. risk transactions and assessment of injury).
C. Roxin / L. Greco, Strafrecht. Allgemeiner Teil, vol. I, 5th ed., C.H. Beck, Munich, 2020 (theory of the creation of legally disapproved risks).
Argentine Supreme Court (CSJN), Llerena, Horacio Luis, Fallos 328:1491 (2005) — objective impartiality of the adjudicator.
ECtHR, Piersack v. Belgium (1982) and De Cubber v. Belgium (1984) — doctrine of appearances.
SEC v. W.J. Howey Co., 328 U.S. 293 (1946).
SEC v. Shavers, No. 4:13-CV-416 (E.D. Tex. 2013).
Class action over the $LIBRA token before the U.S. District Court for the Southern District of New York (v. Hayden Davis / Kelsier Ventures and Ben Chow / Meteora), pending.
Audiencia Nacional of Spain, Arbistar 2.0 case (preliminary proceedings, Central Investigating Court, 2020/2021).
National Criminal and Correctional Federal Court No. 7 (Argentina), case CFP 772/2025, ruling of July 3, 2026 (motion asserting lack of action).
Doctrine: S. Soler, Derecho Penal Argentino, vol. IV; R. Núñez, Tratado de Derecho Penal, vol. V; E. Donna, Derecho Penal. Parte Especial, vol. II-B (fraud: artifice, mise en scène and suitability of the deception).
