Senator Elizabeth Warren has called on regulators to investigate the Trump memecoins, citing concerns about ethics, potential conflicts of interest, and national security risks. Warren sent a letter to agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), asking them to examine the Official Trump (TRUMP) and Melania Meme (MELANIA) tokens. According to her, these tokens not only raise ethical questions but also expose investors to significant risks.
Excerpt of Warren’s letter on the Trump family’s memecoins. Source: Senate Banking CommitteeWhy Warren Asked Regulators to Probe TRUMP Memecoins?
Warren’s letter outlined several major issues. First, she highlighted the conflict of interest created by Trump’s dual roles as a token promoter and the U.S. President. As President, Trump has the power to appoint leaders of key regulatory agencies responsible for overseeing cryptocurrencies. This raises questions about whether his policy decisions could favor his financial interests in the memecoins.
Another concern is the possibility of foreign interference. Warren warned that hostile nations could exploit the untraceable nature of cryptocurrencies to buy these tokens and exert covert influence over U.S. politics. This possibility, she argued, creates a serious risk to national security.
Warren also pointed out that the Trump Organization and its affiliates control 80% of the TRUMP token’s supply. This level of ownership means smaller investors are left to bear the risks of price volatility. According to Warren, this situation unfairly benefits the Trump family while leaving retail investors vulnerable.
40 Wallets Holds 94% Of The Token — Retail Investors Are At Risk
The TRUMP token saw a meteoric rise shortly after its launch, reaching an all-time high of $73. However, it quickly lost momentum, falling 57% to its current price of around $32. The MELANIA token followed a similar trajectory, peaking at $13 before plummeting to $2.60. These steep price declines have left many small investors facing losses.
Blockchain analytics firm Chainalysis revealed that the vast majority of these tokens are controlled by a small group of investors. Approximately 94% of the combined token supply is held by just 40 wallets.Trump
40 crypto whales hold 94% of TRUMP and MELANIE token. Source: ChainalysisThis concentration of ownership makes the market highly susceptible to manipulation. If even a few of these large holders decide to sell their tokens, it could trigger a significant price crash, leaving smaller investors with major losses.
TRUMP Token Has No Practical Use
A major criticism of the Trump memecoins is their lack of utility. Even Cathie Wood, CEO of ARK Invest, has dismissed the tokens as speculative assets with no practical use. Unlike cryptocurrencies like Bitcoin and Ethereum, which facilitate transactions or power decentralized applications, the TRUMP and MELANIA tokens serve no practical function beyond speculation.
Wood likened the current memecoin frenzy to the initial coin offering (ICO) boom of 2017, a period marked by the rise of speculative and often poorly designed tokens. She emphasized that ARK Invest avoids memecoins due to their lack of meaningful contributions to the financial ecosystem.
Who Really Benefits?
Despite the risks, the memecoins have attracted significant interest, particularly from first-time crypto users. Chainalysis reported that nearly half of the buyers created wallets specifically to purchase TRUMP and MELANIA tokens. However, most of these investors have seen little to no returns, with many losing money due to price volatility.
The primary beneficiaries appear to be the Trump Organization and a small group of large holders. Warren has accused the tokens of being a financial tool designed to personally enrich Trump and his affiliates, while smaller investors bear the risks.
Is It Time to Dump Trump Memecoin?
If regulators decide to take legal action against the Trump memecoins, it could have far-reaching consequences. Such action could undermine investor confidence and lead to a significant sell-off, further driving down the tokens’ prices. The possibility of stricter regulations on memecoins could also discourage potential investors and make it more difficult for these tokens to operate effectively.
The controversy surrounding the tokens could also damage Trump’s public image. Critics argue that the memecoins enrich the Trump family at the expense of retail investors, a perception that could harm the tokens’ appeal. Some experts have also raised concerns about a potential “rug pull,” where the Trump Organization could sell off its large holdings, crashing the tokens’ value and leaving small investors with heavy losses.
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