Crypto executives fear investor backlash over Trump memecoins

Memecoin, launched by President Donald Trump and his wife days before his inauguration, is damaging the industry’s reputation and risks a backlash from investors, crypto executives have warned.

$TRUMP In the US, it was launched by the President on Friday evening and was followed by Melania on Sunday The total nominal value of both tokens initially rose over the weekend, with the president’s reaching $14.5 billion and Melania’s nearly $3 billion.

But since then they have lost more than half their value, prompting accusations of conflicts of interest and concerns that thousands of retail investors have been drawn to trade tokens that are even more volatile 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] The crypto policy that Trump can set is a given,” he added.

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

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

According to data from CoinMarketCap, most of the trading activity of the 200 million Trump coins available is concentrated not in the US but on little-known Asia-based exchanges such as BiKing, Gate.io and Megabit.

Memecoins have no cash flow, business model or practical use on which to base their valuation. Their value derives from their popularity, which is often as ephemeral as the memes they represent.

“Trump memes are intended to serve as an expression of support for and engagement with the ideals and beliefs embodied by the ‘$TRUMP’ symbol,” says Coin’s website.

The Trump coin was introduced after the president gave his enthusiastic support for crypto during his election campaign. He promised a more industry-friendly regime for companies after executives faced a regulatory crackdown under the Biden administration.

But a lot Crypto Industry worries that the launches threaten to further damage the reputation of a sector trying to rebuild trust after a series of high-profile frauds and collapses.

Some lawmakers, meanwhile, expressed concern that retailers could lose huge amounts of money.

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

“His economic interests are for sale,” said Oskar Aslund, chief strategy officer at AKJ, a crypto hedge fund brokerage. “There are no checks and balances.”

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

“I believe it hurts the industry,” Skybridge Capital founder and former White House communications director Anthony Scaramucci said during a panel in Davos on Tuesday. “I think it will slow some people down in the regulatory process,” added Scaramucci, whose firm runs a digital asset fund.

The world’s most popular memecoins are tokens that represent viral Internet moments and characters — such as Dogecoin, representing a Shibu Inu dog; Pepe, representing a comic green frog; and fortcoin.

About 80 percent of Trump’s tokens are held by CIC Digital, a company affiliated with the Trump Organization, and a business co-owned by CIC called Fight Fight Fight LLC, according to the token’s website — a reference to last summer’s assassination attempt on Trump. . The companies will also receive a portion of the trading revenue associated with the Trump token.

Tokens held by insiders will begin to be unlocked for sale within the next three to 12 months

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

“We need to do me a favor and bring that coin to fulfill the vision that God has called us to do in the world,” he said in a video online.

While Trump’s promises of crypto-friendly regulations were welcomed by the industry, executives doubt the president’s enthusiasm for memecoin will benefit them in the long run.

“The immediate impact is diverting liquidity and attention away from valid projects working on real use cases that the industry desperately needs to prove to the world in 2025,” said Serge-Raymond Najabandora, Yield Guild Games’ corporate development and finance manager. The Blockchain Company.

“[Memecoins] Ultimately it will cost retail investors given its zero sum nature. This is unfortunately ironic [former Securities and Exchange Commission chair] Gary Gensler was trying to avoid,” he added.

Trump has promised to “end the oppression” of the crypto industry and nominated crypto advocate Paul Atkins to run the regulator, leading many to believe that Trump’s own scrutiny of the currency is unlikely.

In an apparent attempt to head off potential litigation, the terms listed on the Trump MemeCoin website state that users “agree that you will not bring, join or participate in any class action lawsuit for any claim, dispute or dispute”.

Haley 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. Last month, he said the case was ongoing and he was “cooperating fully” with lawyers.

“There is no protection for retail investors,” Åslund added. “He’s above the law which is obviously a scary thing.”