In this sense, claims Jacob Silverman, co-author of Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of FraudThe TRUMP coin setup appears to bear some of the hallmarks of a “classic memecoin pump-and-dump” – a maneuver in which an issuer retains large amounts of its coins, promotes the project, and then redeems its holdings, thereby devaluing the coins “If you have an insider distribution of 80 percent, the risk that it will be thrown out to the public or that there will be a big sell-off is just enormous.” That’s a Huge red flag,” Silverman claims. “Unfortunately, some poor guys get soaked.” (Pump-and-dumps take up about a room legal gray areasay legal experts, but are condemned as ethically dubious.)
Melania Trump’s decision to release her own memecoin appears to have already dealt a blow to TRUMP investors, even in the absence of an alleged potential pump-and-dump. After the MELANIA coin went live, the TRUMP token dropped in price by 50 percent.
The litany of unofficial Trump-inspired memecoins – including MAGA, HERSELF Six, Doland Tremp And Super Trump– have also fallen in value. During the 2024 election cycle, political memecoins were used as Proxy for betting on the election outcome and express support for a particular candidate, with events waxing and waning throughout the campaign. But the introduction of TRUMP inadvertently decimated the number of inventors who bought unofficial coins as a show of support for Trump.
“I don’t think this is appropriate for the president of the United States,” Steven Steele, marketing director for the MAGA token, said in one video posted on X. “This just seems like a tremendous money grab.”
Perhaps more dangerous than the financial losses incurred by supporters, the Trump memecoin could also act as a new vector for bribery, Silverman claims. By investing large sums in a cryptocurrency in which Trump has a strong financial interest, thereby driving up its price, politically motivated actors could curry favor with the president without any direct transaction taking place, he claims. “These are types of channels of influence and leverage the likes of which we have never seen before,” claims Silverman.
The release of an official Trump memecoin marks the latest development in the president’s ongoing flirtation with cryptocurrencies. Although Trump in his first term called Bitcoin “Fraud“He made a complete about-face ahead of the 2024 presidential election. As figureheads of the crypto industry endorsed his presidency And donated hundreds of millions of dollars In super-political pro-crypto action committees, Trump began referring to himself as “Crypto President.”
In July in conversation with Thousands of Bitcoiners At a conference in Nashville, Tennessee, Trump promised to make the US the “crypto capital of the planet” and create a national “crypto capital of the planet.”Bitcoin stock” upon re-election. Then in September, the Trump family helped launch a new crypto company, World Liberty Financial, which they touted as a way to “make finance great again.” (It remains unclear what services World Liberty Financial will provide.)
World Liberty Financial was met with skepticism by some members of the crypto industry who feared the project could result in investor losses and permanent reputational damage if it failed. The same logic applies to the TRUMP memecoin. “If this completely blows up in a lot of people’s faces, it will be super bad because the media attention will be negative,” Bendiksen says.
But despite all the possible consequences, there is little stopping Trump from testing the limits of what is acceptable with crypto, Silverman says, as others have done before him. Especially as him prepares to overhaul the SECthe financial supervisory authority They pursued the crypto industry most vigorously under the previous government.
“In a way, he’s just another crypto entrepreneur,” Silverman says. “He happens to be the president.”