When Donald Trump won the presidency in November, many in the cryptocurrency world celebrated, buoyed by his promises to embrace deregulation and support crypto entrepreneurs. Just before he took office, heavyweights from the crypto sector gathered in Washington for a lively event dubbed the Crypto Ball, enjoying their newfound influence in political circles.
Amidst the festivities, Trump made a surprising announcement: he was launching a new cryptocurrency called TRUMP. This digital coin, considered a meme coin, doesn’t have intrinsic value and instead fluctuates based on market forces. Supporters of Trump, along with eager day traders, have contributed to billions in trading activity, driven by enthusiasm, loyalty, and the tantalizing prospect of quick profits. The creators of the coin—entities linked to the Trump organization—are reportedly seeing hypothetical earnings in the billions. Shortly after TRUMP’s launch, Melania Trump followed suit with her own meme coin, which also experienced significant price volatility. As of Wednesday, TRUMP was listed as the 25th most valuable cryptocurrency globally, trading around $43, a notable decline from its earlier high of $75.
Read More: What Trump’s Win Means for Crypto.
The introduction of Trump’s meme coins has sparked a lot of interest in the cryptocurrency space, attracting many newcomers. For some, these coins represent Trump’s commitment to the growth of cryptocurrency. However, many within the crypto community have reacted negatively, viewing this as a blatant attempt to profit from his supporters. With Trump’s team controlling over 80% of the token supply, they hold substantial power over its market valuation. Although they are unable to liquidate their holdings for several months, such moves could severely impact the market, leading to losses for average investors.
Veterans in the crypto industry express concern that these tokens may heighten public distrust in a sector already plagued by scams and fraud. “The crypto space has empowered someone who is using it to exploit potential corruption,” notes Angela Walch, a cryptocurrency researcher and writer. “It’s quite embarrassing.”
Trump has downplayed his role in the coin’s creation, stating at a press conference on January 21: “I don’t know much about it other than the fact that I launched it.” The Trump Organization has not been quick to respond to inquiries for comment, and a representative from the White House declined to provide any insights.
Meanwhile, lawmakers and legal experts have raised ethical and geopolitical concerns regarding these tokens, arguing that they could facilitate bribery and conflicts of interest. “These coins could enable him to gain financial benefits from foreign adversaries, prioritizing his interests over those of Americans,” says Puja Ohlhaver, a lawyer associated with Harvard’s Allen Lab for Democracy Renovation.
What are meme coins?
Examples of meme coins include TRUMP and MELANIA: these are cryptocurrencies created through coding on a blockchain. Their value mainly stems from public perception and market demand. The teams behind these coins often use popular memes to create buzz, aiming to show that if memes can shape cultural narratives, they should also hold financial worth.
Notable instances include Dogecoin and Shiba Inu, with Dogecoin particularly impacted by tweets from Elon Musk, which have led to dramatic price increases. The lack of intrinsic value makes meme coins highly volatile and speculative, attracting investors hoping to leverage timing for profit. However, buying during market peaks can result in swift losses. Additionally, meme coins have been linked to alleged scams, causing significant financial losses for investors.
Trump supporters have historically harnessed memes as marketing tools. During his presidential campaign, a group of content creators flooded social media with pro-Trump meme content. Last summer, unofficial meme coins inspired by Trump, such as Pepe (TRUMP) and Maga People Token (PEOPLE), saw fluctuations in value, with some bettors interpreting these as indicators of his electoral prospects.
Trump has a history of leveraging crypto for profit, having sold NFT trading cards in 2022 and reportedly making millions, according to financial disclosures. In September, he announced World Liberty Financial, a cryptocurrency platform that has yet to launch. As of now, meme coins remain a quick pathway for aspiring crypto entrepreneurs to generate income.
TRUMP begins trading
On January 18, just two days before stepping into office, Trump announced his token through CIC Digital LLC, an affiliate of the Trump Organization, during the ongoing Crypto Ball. This unexpected announcement caught the industry off guard. Nick O’Neill, a crypto entrepreneur present at the event featuring Snoop Dogg and Speaker Mike Johnson, shared a video on X, mentioning that few attendees were aware of the token launch.
The following day, a buying and selling frenzy ensued, leading to numerous consequences. The Solana blockchain supporting the token and the Coinbase exchange experienced significant transaction delays. “We did not foresee this level of demand,” tweeted Coinbase CEO Brian Armstrong.
Within a day, the team managing the token, led by CIC Digital, reported holdings valued at approximately $51 billion on paper. (This figure is somewhat misleading, as attempting to cash out would likely cause the price to drop.) On the same day, Melania Trump introduced her meme coin, MELANIA, which subsequently resulted in a severe drop in TRUMP’s market cap as traders shifted their focus. Following MELANIA’s launch, TRUMP plummeted from over $70 to around $45 within just an hour. In addition, a fake BARRON memecoin, unrelated to Trump’s youngest son, briefly reached a market cap of $460 million before crashing by 95%.
Some of Trump’s most vocal crypto supporters accused him of exploitative conduct regarding the coin’s introduction. The core principle of crypto is decentralization; however, Trump’s team controls at least 80% of the TRUMP token’s supply. Another blockchain analytics firm, Bubblemaps, found that 89% of MELANIA’s tokens were held in a single wallet. Conor Gregor, an executive at Coinbase, noted that Trump’s team generated $58 million solely from trading fees.
“Trump’s credibility has been entirely compromised,” remarked investment manager Michael A. Gayed. Anthony Scaramucci, Trump’s former communications director and a crypto supporter, commented: “No one can genuinely think this is beneficial for our society.”
“There’s significant reflection happening in the industry right now,” observes Walch. “Sure, we gained power, but did it serve the original purposes we aimed to achieve?”
Ethical and national security concerns
Critics beyond the crypto realm have raised ethical questions. Trump is now directly involved in an industry he is supposed to regulate. (The affiliated companies claim that Trump tokens are “not investments or securities but rather an ‘expression of support.’”) Opponents argue that Trump’s financial gains from crypto could deter him from enforcing regulations that could significantly impact the value of his tokens. Representative Ro Khanna, a California Democrat and prominent crypto advocate, suggested on X that “Elected officials must be legally barred from holding meme coins.”
Some observers express concern that these tokens might pose a national security threat, allowing foreign actors to acquire substantial amounts and potentially sway Trump’s decisions. These actors might buy tokens to gain favor or threaten to sell them, which could lead to a drop in the token’s price. Using cryptographic methods, they could even conceal their identities from everyone except Trump, asserts Ohlhaver from the Allen Lab.
The Emoluments Clauses of the Constitution were established to prevent such conflicts of interest, prohibiting a President from using their office to enrich themselves. Historically, gift-giving was a common corrupt practice among European leaders and diplomats. Some argue that since Trump’s token launch took place before he officially took office, he acted as a private individual. “It’s easier for them to launch these BEFORE he officially becomes President,” noted crypto journalist Zack Guzmán on X. “Claiming Trump is profiting from the presidency and violating the Emoluments Clause would have been much simpler if he hadn’t.”
Nonetheless, Ohlhaver argues that as long as Trump retains ownership of the tokens, a significant conflict of interest remains. “He still holds tokens that could increase in value if a foreign adversary artificially inflates them,” she states. Ohlhaver also believes that Trump’s meme coin undermines public understanding of currency. “In an era of social media and global networks, it’s alarmingly easy to exploit your influence to create a new form of currency and give it legitimacy,” she explains. “It’s vital to protect our national public goods and ensure they serve the collective interests, rather than benefiting a privileged few at the expense of the wider population.”
Andrew R. Chow’s book on crypto and Sam Bankman-Fried, Cryptomania, was published in August.
