In this sense, says Jacob Silverman, author of Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraudthe TRUMP coin setup appears to have some of the hallmarks of a “classic memecoin pump and dump”—a mechanism where an issuer keeps its majority coin, develops a project, and then releases its holdings, reducing the value of the coin. coin and huge losses for other investors. some kind of big sale is just big. It’s a big red flag,” Silverman said. “Unfortunately, some poor saps will be drowned.” (Pumps and landfills occupy a legal gray area, legal experts say, but they’re completely dismissed as questionable.)
Melania Trump’s decision to release her own memecoin appears to have caused problems for TRUMP investors, even without the potential pump-and-dump allegations. After the MELANIA coin went live, the TRUMP token dropped in price by 50 percent.
A list of illegal Trump-inspired memecoins — among them MAGA, MAGA Hat, Doland Tremp and Super Trump — has dropped in value. During the 2024 election cycle, political memecoins are used as a proxy for betting on the outcome of the election and expressing support for a particular candidate, rising and falling and events on the campaign trail. But the launch of TRUMP has unknowingly brought down founders who are buying illegal coins as a sign of their support for Trump.
“I don’t think this is appropriate for the president of the United States,” said Steven Steele, marketing director of the MAGA token, in a video posted on X. “This appears to be a very serious fraud.”
Perhaps more dangerous than the financial loss it has brought to supporters, the Trump memecoin could also serve as a new vector for bribery, Silverman said. By investing large sums of money in a cryptocurrency where Trump has a large financial interest, thus driving up its price, politically motivated actors can gain favor with the president without any kind of transaction taking place, he says. “These are the kinds of channels of influence and the kind of power that we haven’t seen before,” Silverman said.
The release of an official Trump memecoin marks the latest development in the president’s flirtation with crypto. Although in his first term Trump rejected bitcoin as a “scam,” he did a complete volte-face before the 2024 presidential election. As crypto industry executives endorsed his presidency and threw hundreds of millions of dollars in donations to pro-crypto super political action committees, Trump began to cast himself as the “crypto president.
In July, speaking to thousands of bitcoiners at a conference in Nashville, Tennessee, Trump promised to turn the US into the “crypto capital of the planet” and establish a national “bitcoin stockpile” if re-elected. Then in September, the Trump family helped launch a new crypto business, World Liberty Financial, which they pitched as a way to “make finance great again.” (It is not yet clear what services World Liberty Financial will provide.)
World Liberty Financial was met with skepticism by some members of the crypto industry, who were concerned that the project could lead to losses among investors and face lasting reputational damage if it fails. The same concept applies to TRUMP’s memecoin. “If this completely blows up in a lot of people’s faces, it will be very bad, because the media attention will be bad,” Bendiksen said.
Yet of all the possible outcomes, there is little to prevent Trump from testing the boundaries of what is acceptable in crypto, Silverman said, as others have done before him. Especially as he prepares to overhaul the SEC, the financial regulator that aggressively pursued the crypto industry under the previous administration.
“In a way, he’s another crypto entrepreneur,” Silverman said. “He just happens to be the president.”