In this sense, says Jacob Silverman, co-author Basic money: cryptocurrency, casino capitalism and the golden age of fraudthe TRUMP coin setup appears to bear some of the hallmarks of a “classic memecoin pump and dump” – a maneuver in which an issuer retains gigantic amounts of coins, promotes the project, and then monetizes its holdings, devaluing the coin and inflicting massive losses on other investors. “When insider distribution is 80 percent, the risk of it being leaked to the public or of some major sell-off happening is just massive. That’s a huge red flag,” says Silverman. “Unfortunately, some of the poor sap will get soaked.” (Draining and pumping out occupy something of a legal gray area, legal experts say, but are strongly condemned as ethically questionable).
Melania Trump’s decision to launch her own Memecoin appears to have already dealt a blow to TRUMP investors, even in the absence of the alleged potential pump and dump. After the MELANIA coin came into force, the TRUMP token appeared the price dropped by 50 percent.
A litany of unofficial Trump-inspired memecoins – among them MAGA, SAM Six, Doland Tremp AND Great Trump– also lost their value. During the 2024 election cycle, political memecoins served as a proxy tool for betting on election results and expressing support for a specific candidate, whose support rose and fell depending on events on the campaign trail. However, the launch of TRUMP inadvertently decimated inventors who purchased unofficial coins as a sign of their support for Trump.
“I don’t think that’s appropriate for the president of the United States,” says Steven Steele, director of marketing for the MAGA token, in video sent to X. “This just seems like a blatant money grab.”
Perhaps Trump’s memecoin, more dangerous than the financial losses suffered by supporters, could also become a new vector for bribery, Silverman argues. By investing large sums in a cryptocurrency in which Trump has a major financial interest, thereby driving up its price, politically motivated actors could curry favor with the president without making any direct transaction, he argues. “These are the kinds of channels of influence and leverage that we’ve never really seen before,” says Silverman.
The release of Trump’s official Memecoin marks the latest development in the president’s ongoing flirtation with cryptocurrencies. Although during his first term, Trump dismissed Bitcoin as “fraud” – he made a complete U-turn before the 2024 presidential elections. As crypto industry figureheads endorsed his presidency and donated hundreds of millions of dollars in donations to pro-crypto super political action committees, Trump began presenting himself as “crypto-president“
In July, speaking to thousands of bitcoiners at a conference in Nashville, Tennessee, Trump promised to transform the United States into the “crypto capital of the planet” and create a national “bitcoin stockpile” if re-elected. Then in September, the Trump family helped launch a new crypto company, World Liberty Financial, which they pitched as a way to “return the glory days of finance.” (It is unclear what services World Liberty Financial will provide.)
World Liberty Financial faced skepticism from some in the crypto industry who feared the project could lead to losses among investors and cause lasting reputational damage if it failed. The same logic applies to memecoin TRUMP. “If this completely backfires on a lot of people, it will be very bad because the media attention will be negative,” Bendiksen says.
But despite all the potential consequences, there’s little stopping Trump from testing the boundaries of what’s acceptable with cryptocurrencies, Silverman says, as others have done before him. Especially as it prepares to overhaul the SEC, the financial regulator that most vigorously pursued the cryptocurrency industry under the previous administration.
“In some ways, he’s just another cryptocurrency entrepreneur,” Silverman says. “He happens to be the president.”