Why So Many Crypto Experts Hate Trump's Meme Coins

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The Trump family's latest venture includes two new cryptocurrency meme coins, marking a historic first for a sitting president. These investments are among the most controversial ever made by a commander in chief.

Critics argue that this move is essentially large-scale bribery and an unprecedented example of political grift. Trump's meme coins are not only controversial but also raise significant concerns within the crypto industry.

The Trump Brand and Crypto

Donald Trump has a long history of monetizing his brand. Today, consumers can purchase collectible Trump trading cards, autographed Trump guitars, Trump Won sneakers, and even Trump-endorsed Bibles.

Despite his past skepticism of cryptocurrency—once calling Bitcoin a scam—Trump has recently embraced the industry. By last summer, he promised to make the U.S. the global leader in crypto.

Under the Biden administration, the SEC sued major crypto companies like Coinbase and Binance, making many feel that regulatory actions were unfairly targeting the industry, particularly in response to the FTX collapse. Trump, on the other hand, pledged to create a more crypto-friendly regulatory environment.

Before the launch of Trump's meme coins, members of his campaign spoke about fostering innovation in the U.S. crypto industry. Trump has since taken concrete steps, such as signing an executive order to establish a national digital asset stockpile and pardoning Silk Road founder Ross Ulbricht, who had been serving a life sentence for operating an underground marketplace that used cryptocurrency for transactions.

The Meme Coin Launch and Ethical Concerns

Trump announced his meme coin launch on the same day his supporters hosted a Crypto Ball event to celebrate his inauguration. The TrumpCoin started at nearly zero value but quickly surged to a market cap as high as $15 billion. Similarly, the MelaniaCoin reached a peak valuation of $2 billion within hours of its launch.

However, the value of both coins declined sharply in the following days. As of February 11th, the Trump token was trading at $15.56, with a market cap exceeding $3 billion. Meanwhile, the MelaniaCoin was valued at $1.42, with a market cap of about $212 million.

The introduction of these meme coins has been met with skepticism in the crypto industry. Some worry that their rapid rise and fall could disillusion investors and increase political division around cryptocurrency.

Despite claims that the Trump token is not political, 80% of its supply is controlled by Fight Fight Fight and CIC Digital, an affiliate of the Trump Organization. Concerns have been raised about how these entities might decide to monetize or sell their holdings in the future.

Eric Trump, Executive Vice President of the Trump Organization, responded to criticism by stating, "The Trump Meme Coin is currently the hottest digital meme on earth, and I truly believe that World Liberty Financial will revolutionize DeFi/CeFi and will be the future of finance. We are just getting started."

Many crypto executives and investors have been working to rebuild the industry’s image as a serious financial sector. However, the launch of meme coins reinforces perceptions that crypto is driven by speculation and risky investments.

What Are Meme Coins?

Meme coins are a type of cryptocurrency whose value is largely based on internet popularity rather than economic fundamentals. Popular examples include Dogecoin and Shiba Inu.

These coins exist in a regulatory gray area. While they are not explicitly illegal, they may violate securities, commodities, or other financial regulations.

One major criticism of meme coins is their vulnerability to pump-and-dump schemes, where hype artificially inflates a token’s value, attracting more buyers. When major holders sell off their holdings, the price crashes, often leaving smaller investors with worthless assets—a practice known as a "rug pull."

Some experts argue that a sitting president should not be profiting from financial ventures while in office. Additionally, concerns have been raised about the possibility of foreign entities using these meme coins to exert influence over Trump or his associates.

Despite these concerns, the Trump meme coins have attracted new individual investors to the crypto market. Most holders own less than $100 worth of the tokens. However, as of the week of February 3rd, crypto forensic firm Chainalysis reported that more than 810,000 wallets holding the Trump token had lost money.