In this sense, says Jacob Silverman, co-author of Easy Money: Cryptocurrencies, Casino Capitalism, and the Golden Age of FraudThe TRUMP coin setup appears to have some of the characteristics of a “classic memecoin pump and dump,” a maneuver whereby an issuer holds large amounts of its coin, promotes the project, and then cashes out its holdings, devaluing the coin and cause huge losses to other investors. “When you have an 80 percent internal distribution, the risk of it being released to the public or there being some kind of major liquidation is just massive. “It’s a huge red flag,” Silverman alleges. “Unfortunately, some poor idiots are going to get soaked.” (Pump-and-dumps occupy something of a legal gray area, legal experts say, but they are roundly condemned as ethically dubious.)
Melania Trump’s decision to launch her own memecoin appears to have already dealt a blow to TRUMP investors, even in the absence of any supposed pump-and-dump potential. After MELANIA coin was launched, TRUMP token price dropped by 50 percent.
The litany of unofficial Trump-inspired memecoins, including MAGA, MAGA hat, Doland Tremp and Super Trump—They have also lost value. During the 2024 election cycle, political memecoins were used as a proxy to bet on the outcome of the election and express support for a particular candidate, rising and falling depending on the events of the election campaign. But TRUMP’s launch has inadvertently decimated inventors who bought unofficial coins as a show of their support for Trump.
“I don’t think this is appropriate for the president of the United States,” says Steven Steele, marketing director of the MAGA token, in a video posted on X. “This seems like an egregious money grab.”
Perhaps more dangerous than the financial losses suffered by his supporters, Trump’s memecoin could also act as a new vector for bribery, Silverman claims. By investing large sums in a cryptocurrency in which Trump has a large financial interest, thereby raising its price, politically motivated actors could curry favor with the president without any type of direct transaction occurring, he alleges. “These are types of channels of influence and leverage that we’ve never seen before,” Silverman says.
The launch of an official Trump memecoin marks the latest development in the president’s ongoing flirtation with cryptocurrencies. Although in his first term Trump rejected bitcoin as a “scam” came full circle in the run-up to the 2024 presidential election. As cryptocurrency industry figureheads endorsed his presidency and donated hundreds of millions of dollars to pro-crypto super political action committees, Trump began running like the “crypto president.”
In July, speaking to thousands of bitcoiners at a conference in Nashville, Tennessee, Trump promised to make the United States the “crypto capital of the planet” and establish a national “bitcoin reserve” if he was re-elected. Then in September, the Trump family helped launch a new cryptocurrency 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 worried that the project could lead to losses among investors and cause lasting damage to its reputation if it failed. The same logic applies to the TRUMP memecoin. “If this blows up in a lot of people’s faces, it will be very bad, because the media attention will be negative,” Bendiksen says.
Yet despite all the potential consequences, there is little to stop Trump from testing the limits of what is acceptable with cryptocurrencies, Silverman says, as others have done before him. Particularly as it prepares to reform the SEC, the financial regulator that most aggressively pursued the crypto industry during the previous administration.
“In some ways, he’s just another crypto entrepreneur,” Silverman says. “It turns out that it is the president.”