Concerns rise as Trump’s meme coins alarm crypto insiders and legal experts
When Donald Trump emerged victorious in the presidential election in November, the crypto community rejoiced. They believed in his commitment to deregulation and supporting crypto entrepreneurs, viewing him as a beacon of legitimacy for the industry. Just days before his inauguration, luminaries of the industry convened in Washington for the Crypto Ball, reveling in their newfound status as insiders in the nation’s capital.
However, during the festivities, the mood took an unexpected turn as Trump made a surprising announcement online regarding the launch of a new cryptocurrency called TRUMP. This new coin, classified as a meme coin, operates purely on supply and demand, lacking any intrinsic value. Supporters of Trump and opportunistic traders alike engaged in a feverish frenzy, driving billions of dollars in sales fueled by loyalty, hype, and the allure of profits. The affiliate companies of the Trump organization, which are the creators of TRUMP, reaped billions of dollars on paper as a result. Subsequently, Melania Trump unveiled her own meme coin, MELANIA, which also experienced volatile fluctuations. At one point, TRUMP emerged as the 25th most valuable cryptocurrency in the world, according to CoinMarketCap, although its value dipped significantly from its peak of $75 to around $43.
The introduction of Trump’s meme coins served as a catalyst for increasing attention towards the crypto realm and enticed numerous newcomers to dabble in digital currencies. While some interpreted the launch of these coins as a positive sign of Trump’s endorsement of the industry and his commitment to fostering its expansion, many within the crypto community viewed it with disdain, seeing it as a money-making scheme and a means for Trump to profit directly from his followers. With Trump’s team holding an 80% stake in the TRUMP coin, they hold immense power over its price movements. While there are restrictions on selling their holdings for some time, any attempt to do so could precipitate a market crash, leaving regular users at a loss.
Concerns have been raised by elected officials and legal experts alike regarding the ethical implications and potential geopolitical ramifications of these coins. They assert that meme coins like TRUMP and MELANIA could serve as conduits for bribery and conflicts of interest, allowing Trump to derive financial benefits from foreign adversaries at the expense of the American populace.
Meme coins such as TRUMP and MELANIA are novel digital assets essentially created out of thin air by developers with the intention of deploying them on a blockchain. Their value is contingent upon people’s belief in them and their willingness to invest. Leveraging popular memes on social media for promotion, coin creators aim to generate interest and enthusiasm. Currencies like Dogecoin and Shiba Inu have illustrated this concept, with Dogecoin notably influenced by Elon Musk’s public endorsements, leading to price volatility. The speculative nature of meme coins, devoid of intrinsic value, makes them attractive to investors seeking quick profits, although they also pose significant risks, including fraudulent schemes that have bilked unsuspecting investors.
Trump’s exploitation of memes for marketing dates back to his presidential campaign, where an arsenal of memes was unleashed on social media platforms in support of his candidacy. Additionally, Trump ventured into the crypto realm by peddling NFT trading cards, amassing millions from the venture. His foray into the world of meme coins represents the latest endeavor in his financial pursuits, offering a lucrative avenue for budding crypto entrepreneurs to capitalize swiftly.
On the cusp of his inauguration, Trump unveiled his token, TRUMP, under the auspices of CIC Digital LLC, an offshoot of the Trump Organization. The unexpected launch caught many within the industry off guard, triggering a frenzy of trading activity that caused ripple effects throughout the blockchain and exchange ecosystems. Solana, the blockchain underpinning TRUMP, and Coinbase, the platform facilitating its trade, experienced prolonged transaction delays amid the frenetic buying and selling of the token. The team overseeing TRUMP found themselves in possession of tokens valued at a staggering $51 billion, although such figures were deemed unrealistic as any attempt to liquidate the assets would precipitate price declines. Melania Trump’s subsequent release of the MELANIA coin further added to the turbulence, diminishing TRUMP’s market cap as traders redirected funds to the new offering. In a span of mere hours, TRUMP plummeted from its zenith of over $70 to around $45. Similarly, a fake BARRON memecoin emerged, unaffiliated with Trump’s son, amassing a market cap of $460 million before plummeting by 95%.
Critics within the crypto community decried Trump’s actions as exploitative and antithetical to the decentralized ethos of the industry, given that his team maintained control over a significant portion of the TRUMP token’s supply. Moreover, a blockchain analytics company revealed that a solitary wallet held 89% of the MELANIA token supply, further exacerbating concerns of centralized control in an ostensibly decentralized domain. Amidst the controversy surrounding his
