Crypto executives fear investor reaction to Trump memecoins

Crypto executives have warned that memecoins, launched by President Donald Trump and his wife just days before his inauguration, are damaging the industry’s reputation and could lead to a backlash from investors.

$ TRUMP It was launched by the president on Friday evening in America and followed by $ MELANIA on Sunday. The total value of both tokens increased during the first weekend, with the President’s reaching $14.5 billion and Melania’s reaching $3 billion.

But since then, they have lost more than half their value, fueled by allegations of conflicts of interest and fears of thousands of retail investors attracted to more volatile trading instruments than bitcoin.

“Call me old-fashioned, but I think presidents should focus on running the country,” said Nick Carter, founding partner of crypto venture capital firm Castle Island Ventures and a Trump supporter.

“Not to mention the obvious[conflict of interest]because Trump can set crypto policy,” he added.

At the World Economic Forum in Davos, a major Silicon Valley investor called Tesla boss Elon Musk and Trump “the new Crassus and Caesar,” referring to the Roman political figures who formed an alliance to promote their own interests.

“We’re seeing real ‘end of empire’ stuff in the US,” the person added, noting the overnight creation of billions of dollars in wealth. “Human nature never changes.”

Much of the trading activity in the 200mn Trump coins is not focused on the US, but on lesser-known Asia-based exchanges such as BiKing, Gate.io and Megabit, according to data from CoinMarketCap.

Memecoins have no cash flow, business model, or functionality evaluation. Their value derives from their popularity, which is often as fleeting as the memes they represent.

The coin’s website states that “Trump Memes are intended to be an expression of support for and engagement with the ideas and beliefs embodied by the ‘$TRUMP’ symbol.”

Trumps coin launch comes after the president expressed his passionate support for crypto during his campaign. He promised a more industry-friendly regime for companies after executives faced regulatory action under the Biden administration.

But many in Crypto The industry fears that the startups will further tarnish the sector’s reputation as they try to build trust after several high-profile scams and failures.

And some lawmakers worry that retailers could lose large sums of money.

“This memecoin represents crypto at its worst,” said Maxine Waters, a Democrat congresswoman and member of the US House Financial Services Committee. “Trump has created a way to violate national security and anti-corruption laws, allowing interested parties to transfer money to him and his inner circle anonymously.”

“It’s an economic interest to sell,” said Oskar Aslund, chief strategy officer at AKJ, a crypto hedge fund broker. “There are no checks and balances here.”

Gettrumpmemes.com did not respond to a request for comment.

“I believe it will hurt the industry,” SkyBridge Capital founder and former White House communications director Anthony Scaramucci said at a panel in Davos on Tuesday. “I think it slows down some people in the regulatory process,” added Scaramucci, who runs a digital assets fund.

The world’s most popular memecoins are tokens representing viral internet moments and characters – like Dogecoin, which represents the Shibu Inu dog; Pepe, starring the funny green frog; and Fartcoin.

About 80 percent of Trump’s tokens are held by CIC Digital, a company tied to the Trump Organization and jointly owned by CIC, according to the token website Fight Fight Fight LLC — a reference to last summer’s assassination attempt on Trump. . The companies will also receive a share of the trading revenues associated with the Trump Token.

The tokens held by the insiders will begin to open for sale in the next three to 12 months.

Following Trump’s lead, Detroit pastor Lorenzo Sewell, who spoke at the president’s inauguration, announced the launch of his own MemCoin that day.

“Do me a favor and go get that coin so that we can fulfill the vision that God has called us to do on earth,” he said in a video posted online.

While Trump’s promises for crypto-friendly regulations have been widely welcomed by the industry, executives are skeptical that the president’s enthusiasm for memecoins will benefit them in the long term.

In the industry, he said, the immediate impact of legal projects working on issues that need to be proven to the world in 2025 is chasing the liquid and focus. blockchain company.

“(Memecoins) with their zero-sum nature will ultimately cost retail investors. That’s what (former Securities and Exchange Commission Chairman) Gary Gensler is trying to avoid, which is unfortunately ridiculous,” he added.

Trump has promised to end persecution of the crypto industry and has appointed crypto activist Paul Atkins to lead the regulator, leading many to believe that an investigation into Trump’s coins will be impossible.

In an apparent attempt to avoid potential lawsuits, wording listed on Trump’s memecoin website says users “you agree not to bring, join, or participate in any class action lawsuit that you may have.”

Hallie Welch, who created a memecoin called “Hawk Tuah” based on a viral internet moment, was sued late last year after investors lost money on her token. She said last month that the lawsuit was pending and that she was “cooperating fully” with attorneys.

“There is no protection for retail investors here,” Aslund added. “He’s a man above the law, which is clearly terrifying.”