Memecoins launched by President Donald Trump and his wife days before his inauguration are damaging the industry’s reputation and risking a backlash from investors, cryptocurrency executives have warned.
$ TRUMP launched by the president on Friday night in the US, followed by $MELANIA on Sunday. The total nominal value of both tokens initially rose over the weekend, with the president’s reaching $14.5 billion and Melania’s nearly $3 billion.
But they have since lost more than half their value, leading to accusations of conflicts of interest and concerns that thousands of retail investors were being drawn into trading tokens even more volatile than bitcoin.
“Call me old-fashioned, but I think presidents should focus on running the country,” said Nic Carter, a founding partner at crypto venture capital firm Castle Island Ventures and a Trump supporter.
“Not to mention the obvious [conflict of interest] given the fact that Trump can set crypto policy,” he added.
One major Silicon Valley investor at the World Economic Forum in Davos called Tesla chief Elon Musk and Trump “the new Crassus and Caesar” — referring to Roman political figures who formed an alliance to advance their own interests.
“We are seeing a real ‘end of empire’ in the US,” the person added, pointing to the creation of billions of dollars worth of wealth overnight. “Human nature never changes.”
Much of the trading activity in the available 200 million Trump coins was not focused on the US, but on little-known Asian exchanges such as BiKing, Gate.io and Megabit, according to data from CoinMarketCap.
Memecoins have no cash flow, business model or practical use to support their valuation. Their value derives from their popularity, which is often as fleeting as the memes they represent.
“Trump memes are intended to function as an expression of support and engagement with the ideals and beliefs embodied by the “$TRUMP” symbol,” according to the coin’s website.
The Trumps’ coin launch comes after the president gave his enthusiastic support for the cryptocurrency during his election campaign. He promised a more industry-friendly regime, after executives faced regulatory crackdowns under the Biden administration.
But many in the crypto industry are concerned that the launches threaten to further damage the reputation of a sector that is trying to rebuild confidence after a series of high-profile frauds and collapses.
Some lawmakers, meanwhile, worry that retailers could lose large sums of money.
“This meme coin represents the worst of crypto,” said Maxine Waters, a Democratic congresswoman and member of the US House Financial Services Committee. “Trump has created a way to circumvent national security and anti-corruption laws, allowing interested parties to anonymously transfer money to him and his inner circle.”
“His economic interest is for sale,” said Oskar Åslund, chief strategy officer at AKJ, a crypto hedge fund brokerage. “There are no checks and balances here.”
Gettrumpmemes.com did not respond to a request for comment.
“I believe it hurts the industry,” Anthony Scaramucci, founder of SkyBridge Capital and former White House communications director, said during a panel in Davos on Tuesday. “I think it will slow down some people in the regulatory process,” added Scaramucci, whose firm runs a digital asset fund.
The world’s most popular memecoins are tokens related to viral Internet moments and characters — such as Dogecoin, which represents the Shibu Inu dog; Pepe, who represents the comical green frog; and Fartcoin.
About 80 percent of Trump’s tokens are held by CIC Digital, a company affiliated with the Trump Organization and a company co-owned by CIC called Fight Fight Fight LLC, according to the token’s website — a reference to last summer’s assassination attempt on Trump. The companies will also receive a portion of the trading revenue associated with the Trump Token.
Tokens held by insiders will begin to be unlocked for sale over the next three to 12 months.
Following Trump’s lead, Lorenzo Sewell, a Detroit pastor who spoke during the president’s inauguration, announced the launch of his own memecoin later that day.
“I need you to do me a favor and go get that coin so we can accomplish the vision that God has called us to do on earth,” he said in a video online.
While Trump’s promises of crypto-friendly regulations have been warmly welcomed by the industry, executives doubt that the president’s enthusiasm for memecoins will benefit them in the long term.
“The current effect is to divert liquidity and attention away from legitimate projects working on real use cases that the industry desperately needs to prove to the world in 2025,” said Serge-Raymond Nzabandora, corporate development and finance manager at Yield Guild Games, a blockchain company.
Memecoin will “ultimately cost small investors given its zero-sum nature. It’s unfortunately ironic because that’s what [former Securities and Exchange Commission chair] Gary Gensler was trying to avoid,” he added.
Trump has vowed to “end the persecution” of the crypto industry and has nominated cryptocurrency advocate Paul Atkins to lead the regulator, leading many to think that oversight of Trump’s own coins is unlikely.
In an apparent attempt to prevent potential lawsuits, the terms listed on the Trump memecoin website state that users “agree that you will not initiate, join, or participate in any class action related to any claim, dispute, or controversy you may have.” .
Haliey Welch, who created a memecoin called “Hawk Tuah” based on a viral internet moment, was sued late last year after investors lost money in her token. She said last month that the litigation was ongoing and that she was “fully cooperating” with lawyers.
“There is no protection for small investors in this,” added Åslund. “He’s kind of above the law, which is obviously a scary thing as well.”
