Original Title: Why Trump's Meme Coins Have Alarmed Both Crypto Insiders and Legal Experts

Original Source: TIME

Original Compilation, Translation: 比推 BitpushNews

When Donald Trump won the presidential election in November, many cryptocurrency enthusiasts cheered as he promised to prioritize regulatory relaxation and legalize crypto businesses.

A few days before his inauguration, heavyweights of the industry gathered in Washington for a "crypto gala," celebrating their newfound status as members of the Washington power circle.

However, during the event, almost everyone was shocked by one of Trump's moves, where he announced a new coin called TRUMP, a "meme coin" widely seen as having no intrinsic value, with its price entirely driven by market trading activity.

Trump's supporters and some opportunistic day traders created billions of dollars in trading volume around the coin, driven by loyalty, hype, and the opportunity for quick profits. All these transactions allowed the coin's founder—Trump's affiliated company—to realize billions of dollars in paper gains. On the second day of the coin's release, Melania Trump announced her own meme coin, which also experienced wild price swings. By Wednesday, TRUMP had become the 25th largest cryptocurrency by market cap globally, with a price of around $43, well below its previous peak of $75.

Trump's meme coin brought significant attention to the cryptocurrency industry and attracted many newcomers to the sector.

For some, these coins symbolized Trump's commitment to cryptocurrency and his willingness to drive industry growth. However, many more within the cryptocurrency community viewed these coins with disdain, seeing them as nothing more than a cash grab, a means for Trump to directly profit from his supporters. Trump's team controls at least 80% of the coin's supply, giving them significant influence over the coin's price. While they are temporarily prohibited from selling these holdings, any future sell-off could lead to a market crash, causing substantial losses to ordinary users.

Insiders in the cryptocurrency industry are concerned that these coins may further sow public distrust in an industry already rife with scams and malicious activities.

「The crypto industry empowers an individual, and their first action is to emphasize and capitalize on the rug-pull opportunities in this space,」 cryptocurrency researcher and writer Angela Walch stated, 「It's just embarrassing.」

Trump downplayed his role in the coin's launch, saying during a press conference on January 21, 「Apart from me launching it, I know next to nothing about this coin.」 The Trump Group did not immediately respond to a request for comment. White House spokespeople also declined to comment.

However, elected officials and legal experts have raised ethical and geopolitical concerns. They believe these tokens could become tools for bribery and conflicts of interest. 「These tokens provide Trump with a way to gain economic benefits from foreign adversaries and may allow him to prioritize personal gain over the collective interests of the American people,」 said Puja Ohlhaver, a lawyer at Harvard's Democratic Innovation Lab.

What Is a Memecoin?

Both TRUMP and MELANIA fall under memecoins. These cryptocurrencies are essentially created out of thin air by entrepreneurs through writing blockchain code. Their value entirely depends on people's belief in them and their willingness to buy. To spark market enthusiasm, the teams behind these coins typically leverage popular memes on social media for marketing. The logic behind this is that if memes on social media can drive cultural, creative, and even ideological developments, why can't they also become valuable in finance?

Dogecoin and Shiba Inu are two typical examples, especially Dogecoin, as Elon Musk's tweets have often led to its price surging. However, memecoins lack intrinsic value, making them highly volatile and speculative. This characteristic is precisely what attracts some people: if investors buy at the right time, they may earn huge profits. Conversely, if they buy at the market peak, they may quickly lose all their funds. Additionally, memecoins have been used in some so-called scams, where investors have lost significant amounts of money.

Trump's Relationship with Meme Culture

Trump's supporters often use memes as a marketing tool. During his presidential campaign, a content creation team extensively posted pro-Trump memes on social media. Last summer, some unofficial Trump memecoins, such as Pepe (TRUMP) and Maga People Token (PEOPLE), also experienced price fluctuations, with some investors even viewing them as symbols of Trump's chances of winning the election.

Trump has also made money through cryptocurrency. He began selling NFT trading cards in 2022 and reportedly earned millions of dollars according to financial disclosure documents. In September 2023, he launched the yet-to-be-launched cryptocurrency platform World Liberty Financial. By 2025, meme coins may have become the fastest way for emerging cryptocurrency entrepreneurs to make money.

TRUMP's Trading Frenzy

On January 18, two days before the inauguration, Trump launched his token through a subsidiary of the Trump Organization, CIC Digital LLC. This move took the entire industry by surprise. It was during the "Crypto Ball," an event that also featured guests like Snoop Dogg and House Speaker Mike Johnson. Cryptocurrency entrepreneur Nick O'Neill released a video at the event stating that almost no one at the venue knew about the existence of the token.

The next day, the market began trading the token frantically, triggering a chain reaction. The blockchain platform Solana and the cryptocurrency exchange Coinbase, both supporting the token, experienced hours-long trading delays. Coinbase CEO Brian Armstrong tweeted, "We did not anticipate this level of trading activity."

Within a single day, the team controlling the token (led by CIC Digital) had a token value on their books of around $510 billion. However, this number was not realistically achievable because if they attempted to convert the token to USD, its price would plummet rapidly. Later that day, Melania Trump released her own meme coin, MELANIA, effectively cutting TRUMP's market cap by billions of dollars as traders seemed to sell off TRUMP to buy the new coin. Within an hour of MELANIA going live, TRUMP's price dropped from over $70 to around $45. A fake coin unrelated to Trump's son, BARRON, also briefly reached a market cap of $460 million but then crashed by 95%.

Industry's Moral Dilemma

Some of Trump's cryptocurrency supporters accused him of engaging in predatory behavior using meme coins. Cryptocurrency advocates decentralization, yet the President's team controlled at least 80% of the TRUMP supply. Another blockchain analytics company, Bubblemaps, found that 89% of the MELANIA token supply was concentrated in a single crypto wallet. Coinbase executive Connor McGregor wrote on Saturday that the Trump team had earned $58 million just from transaction fees.

“Trump's reputation has been completely ruined,” investment manager Michael A. Gayed wrote. Former White House Communications Director and cryptocurrency advocate Anthony Scaramucci said, “No one will think this behavior is good for society.”

Angela Walch summed it up, saying, “The entire industry is now undergoing a profound reflection. We have gained power, but does this align with our original goals?”

Concerns About Ethics and National Security

Critics outside the cryptocurrency industry have also raised ethical concerns. Trump is now directly involved in an industry he is responsible for regulating. (The controlling company is a subsidiary of the Trump Organization, they wrote, stating that the Trump token is "not an investment or security, but a form of 'expressive backing.'") Critics argue that the President's windfall from cryptocurrencies gives him no incentive to crack down on the industry, which could lead to a devaluation of his token by billions of dollars. California Democratic Congressman Ro Khanna, one of the leading cryptocurrency supporters in Congress, wrote on X, “The law must prohibit elected officials from holding meme coins.”

Some critics are concerned that these tokens pose a national security threat as they allow foreign agents to purchase large quantities of tokens as leverage in Trump's policy decisions. These agents may buy tokens to win Trump's support—or threaten to sell them, potentially causing a token price crash. Allen Lab's Ohlhaver said they can also use cryptographic technology to hide their identities from everyone in the world, except Trump.

The Founding Fathers sought to prevent such conflicts of interest through the Emoluments Clause in the Constitution, which prohibits the President from using their office to enrich themselves. (At the time, gift-giving was a common corrupt practice among European rulers and diplomats.) Some argue that Trump issued the tokens before taking the oath of office, meaning he was acting as a private citizen. Cryptocurrency journalist Zack Guzmán wrote on X, “Issuing these tokens before Trump formally became President wasn't that complicated for them. “It would be much easier to claim that Trump profited from the presidency and violated the Emoluments Clause.”

However, Ohlhaver believes that as long as Trump holds token stakes, there is a significant conflict of interest. “He still has tokens, and if foreign adversaries pump them up, the price of these tokens will appreciate,” she said.

Ohlhaver also stated that Trump's meme coin fundamentally threatens the public's understanding of money. “With the rise of social media and global social networks, it has become very easy to use your status and influence to create a new form of currency and legitimize it,” she said. “For us, it is important to maintain our national public goods, ensuring they serve our common interests, rather than serving the narrow interests of the elite class, who will gain huge benefits at the expense of everyone else.”

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