Three days before his inauguration as US president, Donald Trump made an unusual move. He launched $Trump, a so-called meme coin that fans and speculators could buy in the hopes it would gain value. Initially, $Trump soared from a value of $7 to $75 per coin in a day, according to crypto price-tracking website CoinMarketCap. Two days later, it dropped to about $40 – just as incoming first lady Melania Trump launched her own meme coin, $Melania. Even the pastor at Trump’s inauguration ceremony, Lorenzo Sewell, got swept up in the meme coin frenzy, promoting a $Lorenzo version the same afternoon.
Early holders wasted no time cashing out, leaving latecomers to take the hit. Experts compare it to classic pump-and-dump schemes, in which veteran traders bid up prices and cash out before normal investors are left in the red.
Meanwhile, with ordinary investors losing their savings, the Trump family and its partners reportedly pocketed nearly $100 million in trading fees. Critics are particularly alarmed given Trump’s moves to loosen cryptocurrency regulations.
One of the entities behind the crypto coin is a company owned by Trump, called CIC Digital. The official website for $TRUMP says CIC Digital will "receive trading revenue derived from trading activities" of the meme coin. Reuters could not determine what portion of the fees so far, if any, had accrued to Trump personally, nor the ownership of the other entities behind the coin.
The creators of the meme coin receive a share of the trading fees from Meteora, a little-known crypto exchange where the $TRUMP coins were first sold, the blockchain analyses showed.
At least 50 of the largest investors in the coin have made profits in excess of $10 million each on the $Trump coin, according to Chainalysis. At the same time, some 200,000 crypto wallets, most with small holdings, lost money on $Trump on the exchange, it said.
This meme coin is slightly different from many coins in that it has a potential alternative function on top of speculation: users buy it to show their support for the president. In this way, it’s similar to a “fan token”, like those produced by sports teams and players. The Trump token has drawn criticism owing to conflicts of interest; among other concerns, Trump owns one of the entities collecting trading fees.
Whether digital assets are "worth the risk" depends entirely on your individual risk tolerance and investment goals, as they present significant potential for high returns but also carry substantial volatility and uncertainty due to their nascent market and regulatory landscape; for most investors, careful research, diversification, and only investing what you can afford to lose are crucial before considering digital asset.
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