The cryptocurrency world has once again found itself in the middle of controversy after the shocking collapse of Libra (LIBRA), a digital asset that skyrocketed to a market cap of $4.56 billion before plunging by 94% in just 11 hours. The crash has led to widespread accusations of insider trading, misappropriation of funds, and potential legal action, even dragging Argentina’s President Javier Milei into the mess.

Libra entered the market with significant hype, attracting investors eager to capitalize on what seemed like the next big thing in crypto. Within hours, its valuation soared, but the momentum was short-lived. Reports indicate that insiders managed to withdraw $107 million before the market collapsed, leaving retail investors in financial ruin. The rapid decline has all the hallmarks of a classic “rug pull,” where early insiders cash out while the rest of the market suffers.

This scandal took an even more dramatic turn when President Javier Milei endorsed Libra, sparking impeachment calls in Argentina. Many now question whether his involvement was simply poor judgment or if he had deeper ties to the project. Regardless, the fallout is severe, with both political and financial implications at stake

Crypto trader Hayden has found himself at the center of the controversy after admitting to sniping both Libra and another coin, Melania ($MELANIA), in an effort to beat other traders to the punch. While sniping tokens is a common practice in decentralized finance (DeFi), Hayden’s actions go beyond simple trading. He has been accused of market manipulation, misappropriating $110 million in funds, and engaging in undisclosed agreements with key opinion leaders (KOLs).

One of his most alarming statements was that KOLs always trade on insider information, justifying it by claiming that crypto is different from traditional capital markets. This statement has sent shockwaves through the industry, as it blatantly acknowledges what many have suspected for years—that some influencers and high-level traders operate in ways that could be considered illegal in regulated financial sectors.

As the Libra debacle unfolds, the crypto community is left wondering whether this bull run will continue or if the market is due for a serious correction. Some believe that this incident will lead to increased regulation, especially given the scale of the fraud. Others argue that the best-case scenario would be a purge of bad actors, but without additional systems and controls, new ones will inevitably take their place.

The line between selling and swapping tokens has also become a topic of discussion. Hayden’s attempt to differentiate between selling and swapping out Melania ($MELANIA) has raised eyebrows, as he insists he did not “liquidate.” However, to the average investor, the difference is negligible; profits were still made at the expense of those who bought in later.

Despite the chaos surrounding Libra, traditional financial institutions continue to show interest in the crypto market. JP Morgan, a banking giant with $3.5 trillion in assets, recently purchased $100 million worth of MicroStrategy (MSTR) stock, a company known for its significant Bitcoin holdings. This move suggests that institutional investors remain bullish on cryptocurrency, even amid the turmoil.

Additionally, the legal landscape for crypto took an unexpected turn when the U.S. Securities and Exchange Commission (SEC) officially declared that XRP is not a security. This long-awaited decision comes after years of legal battles between Ripple and the SEC, potentially setting a precedent for other cryptocurrencies. Rumors have also begun circulating about a possible BlackRock XRP ETF, which, if true, could further legitimize the asset class and attract new investors.

The collapse of Libra serves as yet another reminder of the risks associated with investing in cryptocurrencies. While the market offers enormous profit potential, it is also rife with manipulation, insider trading, and outright fraud.

To protect themselves, investors must conduct thorough research before putting money into new projects. Relying on hype and endorsements, whether from influencers, traders, or even politicians, can be a costly mistake.

As crypto continues to evolve, the industry must address its transparency and regulatory issues to prevent future disasters. Until then, traders and investors must navigate the space with caution, keeping a close eye on both market trends and potential bad actors.