New York
CNN
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President Donald Trump promised cryptocurrency investors that he would usher in an era of legitimacy for an industry that has long been in the financial wilderness — and some mainstream investors have dismissed it as a highly speculative bet at best or an elaborate Ponzi scheme at worst.
But days before his inauguration, Trump shocked many of his cryptocurrency supporters by selling a digital token known as the meme coin, a functionally worthless asset that trades on hype, a vehicle for scams known as You pull out the rug.
To be clear, not all meme coins are scams, and TRUMP and $MELANIA coins appear to have built-in safeguards to prevent rug pulling. Specifically, the Trump Coin website says that majority holders are subject to a three-year unlock schedule, so they cannot sell them all at once. But even without selling a single token, Trump Org. had been swept away An estimated $58 million In a single day of trading fees alone, according to cryptocurrency researcher and former Coinbase CEO Conor Grogan.
However, meme coins have become known for their magic, where developers release a coin, raise its price and cash out quickly. If this sounds familiar, the influencer on the series “Hawk Tuah” was Haley Welch as well Recently filed a lawsuit on its own currency, which briefly rose to a market value of $500 million before falling 90%. Welch said in a Statement sent to X Last month it was taking the situation seriously and working to help affected investors.
Meme coins represent the silly, and sometimes fraudulent, side of cryptocurrencies that increasingly wealthy supporters of widely traded bitcoin and ether want to bypass. The fact that the first “pro-crypto” US president is selling a token for no tangible benefit has some in the industry concerned about the judgment of Trump and his advisers as they prepare to overhaul the US regulatory system with a new enthusiasm for digital assets.
“Trump needs to fire his crypto advisors, top to bottom.” chirp Gabor Gurbax, founder of digital asset company Pointsville.
One giant ethics concern centers on Trump’s majority ownership of coins: 80% of the coin’s supply is owned by Trump Organization affiliates CIC Digital and Fight Fight LLC — a concentration that appears designed to personally enrich the president. Trump Org did not respond to a request for comment, but Eric Trump, the company’s executive vice president, said in an
“Even meme enthusiasts are skeptical of projects where the broader community does not own the majority of the tokens, and they appear to be designed in a way that disproportionately benefits insiders,” Gareth Rhodes, managing director at consulting firm Pacific Street, told me. “But it’s still early days, and the launch team can still take action to make it a more community-focused project.”
Ethics experts quickly denounced the apparent conflict of interest.
Walter Shaub, an ethics watchdog who clashed with Trump during his first term before stepping down, told my colleague Matt Egan that the meme-currency maneuver suggests that “the very idea of government ethics is now a smoldering pit.”
The Trump administration, which officially entered the White House on Monday, did not respond to CNN’s request for comment.
The $3.5 trillion global cryptocurrency market is a big tent, and while tokens like Bitcoin dominate the industry, the open-source, decentralized nature of blockchain and cryptocurrency infrastructure makes it easy for any developer to launch a token, increase the price, and Get away with impunity. according to ForbesBetween 40,000 and 50,000 new meme coins are created every day, with a combined market value of $100 billion.
Last week, just a few days before Trump launched his own token, the New York State Department of Financial Services Issue a consumer alert on “viral viral” meme currencies, which present “an exceptional risk of fraud and loss of funds.”
Matthew Homer, a former financial regulator and now general partner of cryptocurrency firm Department of XYZ, echoed a common refrain in the industry that a lack of regulatory clarity around cryptocurrencies has contributed to these fraud risks.
He said the SEC’s approach “created a situation where projects with genuine benefit face significant regulatory hurdles, while purely speculative assets do not.”
While Bitcoin, the original cryptocurrency, bills itself as a cutting-edge innovation with the potential to revolutionize the financial system, meme currencies have little function outside of gambling. They’re also extremely volatile, in part because they’re usually owned by a small group of investors clustered around a specific, fleeting moment in Internet culture.
In other words, they’re not serious, and crypto bulls worry that the president’s escapades will delay progress on the serious issues he promised to address, like giving investors more regulatory clarity and openness. Plus, it doesn’t help cryptocurrencies in their years-long quest to shake up their sometimes murky reputation if the president regulating the US industry can cash in on them at the same time.
“In general, the introduction of any meme coin incites the wrath of those who are serious about the use, legality and security of cryptocurrencies,” said Kayla Curley, a cryptocurrency expert and partner at global advisory firm StoneTurn. But she said Trump memes “should not lead us to assume that the Trump administration will not seek to strengthen the regulatory environment for cryptocurrencies.”
Throughout the industry, there seems to be a feeling that adults in the cryptocurrency space will simply need to hold their noses through the meme currency drama. It may be embarrassing, but it’s better than suffering under the rule of avowed crypto skeptic Gary Gensler, who oversaw the Securities and Exchange Commission and became an industry bogeyman.
“The industry, whether they are meme fans or not, is excited about a new era of regulatory approach to cryptocurrencies,” Rhodes said.
