When Javier Milei won the presidential election on November 19, 2023, he took the stage at his campaign headquarters and thanked only two people. He dedicated his victory to his sister, Karina Milei — “the boss,” as he calls her — and Santiago Caputo, “a giant in the shadows” and “the true architect” of the triumph.
After being sworn in on December 10, Milei made clear who would hold the power in his far-right administration. The president, his sister and Caputo form the so-called “iron triangle” that makes all the decisions: it appoints and dismisses officials, chooses friends and enemies. Milei is convinced that this governing structure will turn Argentina into a world power.
But this unbreakable trinity suffered its first major crisis this past week. It only took a post by Milei on X in which he endorsed $LIBRA, a cryptocurrency that has turned out to be a scam, for the government to experience its most serious crisis in 14 months.
In the iron triangle, each vertex has a role to play. The president, a self-professed disbeliever in politics, concentrates on the economy, a field in which he considers himself an expert who deserves the Nobel Prize. And, given his evident limitations to establish stable relationships with others, it’s his sister Karina who serves as a bridge to the outside world. Trained in public relations, she speaks on behalf of the president and it is she — without any opposition — who controls the structure of La Libertad Avanza, the governing party.
Caputo, 39, is the ideologist. A key figure, he controls the army of trolls that spreads and defends the official narrative. He’s also involved in the state intelligence services, as well as the office that collects federal taxes, two structures that feed him privileged information day after day, in a manner that isn’t always legal. He has a clear idea about the direction that the administration should be taking: he’s the only person who has the ear of the president. Like Karina, his true power is behind the scenes, protected, as Milei said on the day of his triumph, by “the shadows.”
Despite his significant influence, Caputo isn’t a public official. His position, rather, is that of an external advisor. This allows him to operate within the government without the ethical or legal limitations that apply to the rest of the members of Milei’s Cabinet. Moreover, Caputo isn’t a pure libertarian. In fact, Karina Milei had to force him to join La Libertad Avanza on February 6.
“In 2019, he worked for a consulting firm that advised the campaigns of candidates of all stripes,” says a source close to the president. “Caputo had the vision to see a future president in Milei when no one was taking him seriously… he bet on him and won. Today, he’s respected. And also feared,” he adds.
Another source who is no longer part of the government sees Caputo as a key player in the administration. He’s also the person in charge of covering up the shortcomings of Milei’s sister. “Karina has no [political] training, although she’s always been Javier’s emotional support.” In a dysfunctional government, the source notes that Caputo came “to lay down some order.” Milei doesn’t trust his ministers and “sees enemies everywhere.”
On Friday, February 14, at 7 p.m., the spell that protected the iron triangle was broken. On his social media account, Milei recommended investing in $LIBRA, a “memecoin” — a cryptocurrency inspired by memes or other viral online phenomena — that he marketed as part of a project to finance small and medium-sized Argentine companies. After the price skyrocketed following the presidential post, five crypto wallets that controlled more than 80% of the business took off with the money received from thousands of unwary investors. For five hours, Milei ignored the warnings from experts on social media, who pointed out that $LIBRA was clearly a scam. When he finally deleted his tweet, the president argued that he hadn’t “understood enough” about the project.
The scandal was clear: at best, the president had been scammed by a group of crooks, who convinced him of the benefits of $LIBRA. At worst, he was aware of everything and participated in the scam. The Argentine justice system, along with the U.S. justice system, is already investigating what responsibilities lie with Milei and the traders behind $LIBRA.
To the legal consequences (if any) must be added the political fallout. As the past week progressed, it became clear that the local entrepreneurs who brought the project to the presidential palace were old acquaintances of the president and Karina. Mauricio Novelli is one of them: a small-time crypto trader, he’s also the owner of the business school that Milei taught at less than three years ago. Novelli was the person who connected Milei with Hayden Davis, a U.S. citizen, and Julian Peh of Singapore, the co-developers of $LIBRA.
It quickly became clear that Karina Milei, in her capacity as the president’s general secretary, authorized the partners to enter the official residence. For a while, Caputo was free of blame. But, for the first time, a bomb had exploded at the heart of the iron triangle. It was urgent to roll out damage control.
On Monday, February 17, Milei gave a recorded interview to the TN news channel. In his defense, he said that investors affected by $LIBRA deserved the losses they suffered, because buying memecoins was “like going to the casino.” He added that they had no right to complain.
By making such a statement, Milei acknowledged that $LIBRA was not a project intended to finance small Argentine entrepreneurs. Rather, he admitted that it was pure gambling. When the interview was about to end, Milei said that he would seek legal advice from Minister of Justice Mariano Cúneo Libarona.
As this decision entailed an acknowledgement that Milei had promoted crypto in his capacity “as president,” rather than merely as a “citizen” as he claimed, Caputo felt forced to intervene. The advisor interrupted the interview and, once again, whispered something in Milei’s ear. What he didn’t figure was that someone would take to social media to spread the unedited cut of the interview that was ultimately aired. This was the second bomb that exploded in the heart of the iron triangle.
Caputo decided to sacrifice himself for the cause: he took responsibility for the error in order to protect the president. As part of this strategy, Guillermo Francos, the chief of the Cabinet, was the first to throw the advisor under the bus. “What he did was stupid,” he asserted. Subsequently, Manuel Adorni, the presidential spokesman, joined in: “At the end of the interview,” he claimed, “Milei told him: ‘Santiago, that was unnecessary.’”
The seriousness of the matter was worth the effort: the $LIBRA scandal has struck the executive branch with special force. This is because, for the first time, it has erupted within the iron triangle. Javier, Karina and Santiago are now vulnerable.
Translated by Avik Jain Chatlani.
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