Crypto executives fear a financial backlash with Trump’s memecoins

Memecoins launched by President Donald Trump and his wife days before his inauguration are tarnishing the industry’s reputation and risk being attacked by investors, crypto executives have warned.

$TRUMP announced by the president on Friday evening in the United States and followed on Sunday by $MELANIA. The total value of both tokens increased over the weekend, with the president hitting $14.5bn and Melania hitting nearly $3bn.

But since then they have lost more than half of their value, leading to allegations of conflicts of interest and concerns that thousands of investors have been exposed to trading tokens and more than bitcoin.

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

“Not to mention the obvious (conflict of interest) given the fact that Trump could set a crypto policy,” he added.

A major Silicon Valley investor at the World Economic Forum in Davos called Tesla CEO Elon Musk and Trump “the new Crassus and Caesar” – referring to Roman political figures who conspired to advance their interests.

“We’re seeing a real ‘End of Empire’ thing in the US,” the person added, pointing to the creation of billion-dollar fortunes overnight. “Human nature doesn’t change.”

Most of the trading activity in Trump’s 200mn coins available is not focused on the US but on unknown exchanges based in Asia such as BiKing, Gate.io and Megabit, according to data from CoinMarketCap.

Memecoins have no cash flow, business model or practical use to support their values. Their importance comes from their popularity, which often passes as quickly as the meme they represent.

“Trump Memes are intended to serve as an expression of support for, and to connect with, the sentiments and beliefs embodied by the “$TRUMP” symbol,” the coin’s website says.

The launch of Trumps coin comes after the president expressed his enthusiastic support for crypto during his election campaign. He promised better industrial action for companies, after executives faced regulatory pressure under the Biden administration.

But many in the crypto industry are concerned that the launch threatens to tarnish the reputation of the sector that is trying to rebuild trust after a series of frauds and crashes.

Some lawmakers are still concerned that retailers could lose more money.

“This meme currency represents the worst form of cryptocurrency,” said Maxine Waters, a Democrat congresswoman and member of the US House Financial Services Committee. “Trump has created a system of blocking national security and anti-corruption laws, which allows interested parties to transfer money to him and his close associates.”

“His economic interest is for sale,” said Oskar Åslund, chief strategy officer at AKJ, a crypto hedge fund brokerage company. “There are no checks and balances here.”

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

“I believe it hurts the industry,” Anthony Scaramucci, founder of SkyBridge Capital and former White House communications director, said during a Davos panel on Tuesday. “I think it will cut some people out of the regulatory process,” said Scaramucci, whose firm manages a digital assets fund.

The world’s most popular memecoins are tokens that refer to time and viral internet characters – such as Dogecoin, which represents the Shibu Inu dog; Pepe, representing the green comic frog; and Fartcoin.

About 80 percent of Trump’s tokens are held by CIC Digital, a company affiliated with the Trump Organization, and a CIC joint venture called Fight Fight LLC, according to the tokens’ website. – refers to the assassination attempt on Trump last summer. . The companies will also receive a portion of the corporate tax associated with the Trump brand.

Tokens held by insiders will begin to be unlocked for sale in 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.

“I need you to do me a favor and go and take that money so that we can fulfill the vision that God has called us to do in the world,” he said in an online video.

Although Trump’s promises of crypto-friendly rules were widely accepted by the industry, executives doubt that the president’s enthusiasm for memecoins will benefit them in the long term.

“Immediate reporting has been diverting money and attention away from legitimate projects that address the real use cases that the industry needs to prove globally by 2025,” said Serge-Raymond Nzabandora, CEO of business development and finance at Yield Guild Games. blockchain group.

Memecoins “In the end it will cost retail traders because of its zero nature. Unfortunately it is surprising because this is what (chairman of the Securities and Exchange Commission) Gary Gensler was trying to avoid,” he added to say.

Trump has vowed to “end the oppression” of the crypto industry and has appointed crypto advocate Paul Atkins to run the regulator, leading many to think that scrutinizing Trump’s coins is unlikely.

In an apparent effort to prevent potential lawsuits, the wording listed on the Trump memecoin website states that users “agree that you will not bring, join or participate in any class action lawsuit of the group in relation to any claim, dispute or dispute you may have”.

Haliey Welch, who created a memecoin called “Hawk Tuah” based on the viral internet era, was sued late last year after investors lost money on his token. Last month, he said the case was ongoing and he was “cooperating fully” with lawyers.

“There is no protection for retail investors in this,” Åslund added. “He’s almost above the law, and that’s obviously scary.”