Crypto Firms Demand Stricter Rules After Libra Collapse

The $4 billion crash of the Libra (LIBRA) token, endorsed by Argentine President Javier Milei, has sparked a push for stricter regulations on politically linked cryptocurrencies.

Crypto industry leaders argue that tokens endorsed by public figures need stronger investor protections to prevent insider trading, liquidity drains, and rug pulls.

According to blockchain analytics firm DWF Labs, at least eight insider wallets withdrew $107 million in liquidity, triggering the massive LIBRA collapse.

Industry Demands Stronger Safeguards

To prevent similar market failures, DWF Labs suggests:

🔹 Liquidity locking – Restricting early withdrawals to maintain stability
🔹 Non-sellable liquidity pools – Preventing insiders from dumping tokens
🔹 Launch restrictions – Limiting bot and whale participation to ensure fair distribution

“Limiting bot and whale activity is essential in preventing insider manipulation,” said Andrei Grachev, managing partner at DWF Labs.
“Projects must ensure fair launches so that all investors have an equal chance.”

Libra Collapse Exposed Market Weaknesses

The LIBRA scandal resulted in losses for 74,698 traders, wiping out $286 million in capital.

The sudden crash exposed the need for liquidity safeguards, as DWF Labs warned that tokens backed by high-profile figures are highly susceptible to manipulation.

“Liquidity locking ensures that users can buy and sell tokens without major price slippage, especially during volatile launch phases,” Grachev explained.

The LIBRA collapse comes as New York lawmakers introduced new legislation to protect investors from rug pulls and insider fraud, amid a rising wave of memecoin scams.

Political Fallout and Insider Trading Allegations

The Libra scandal has raised serious concerns over the lack of transparency in politically linked tokens.

🔹 Reports suggest that memecoin insiders knew about LIBRA’s launch two weeks in advance
🔹 President Milei is under pressure as impeachment calls grow
🔹 Milei has requested Argentina’s Anti-Corruption Office to investigate all government officials

“Launchpads must improve due diligence and ensure pre-launch wallet transparency,” Grachev emphasized.

As regulatory scrutiny intensifies, crypto projects may soon face stricter requirements to prevent insider manipulation and liquidity crises.

The LIBRA meltdown may serve as a warning for future politically endorsed tokens, highlighting the urgent need for better safeguards and investor protections.