The Economics of Trump’s Memecoin ‘Fat Grab’

In this sense, says Jacob Silverman, co-author of… Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of FraudTrump’s coin setup appears to have some hallmarks of the classic “memecoin pump and dump” — a maneuver in which the issuer holds large amounts of its coin, promotes the project, and then cashes in on its holdings, reducing the value of the coin. currency and incur huge losses to other investors. Just huge. “It’s a huge red flag,” Silverman claims. “Unfortunately, some of the poor succulents are going to get wet.” (Pumps and dumps occupy some of the… Legal gray areasay legal experts, but are roundly condemned as morally 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 any alleged potential pump-and-dump. After the launch of the Melania coin, a Trump token appeared Decreased in price by 50 percent.

A series of unofficial meme coins inspired by Trump, among them Maga, Yourself six, Doland Trimpe and Super Trump– Its value also declined. During the 2024 election cycle, political memes have been used as currency An agent for betting on the outcome of the elections Expressing support for a particular candidate, up and down with events during the election campaign. But Trump’s launch inadvertently eliminated inventors who purchased unofficial coins as proof of their support for Trump.

“I don’t think this is appropriate for the president of the United States,” Stephen Steele, marketing director for the MAGA symbol, says in an article. video Posted on X. “This looks like a gross cash grab.”

Perhaps more serious than the financial losses to supporters, Trump’s memecoin could also serve as a new vector for bribery, Silverman claims. By investing large sums in a cryptocurrency in which Trump has a significant financial interest, thus driving up its price, politically motivated actors can curry favor with the president without conducting any type of direct transaction, he claims. “These are the kinds of channels of influence and influence that we haven’t seen before,” Silverman says.

The release of Trump’s official coin, memecoin, marks the latest development in the president’s ongoing flirtation with cryptocurrencies. Although in his first term, Trump rejected Bitcoin as “to cheatHe has made a complete change in the run-up to the 2024 presidential election. As crypto industry figures He supported his presidency and He threw hundreds of millions of dollars in donations In pro-crypto super PACs, Trump began presenting himself as “Head encoder“.

In July, he spoke to Thousands of Bitcoin users At a conference in Nashville, Tennessee, Trump promised to turn the United States into the “cryptocurrency capital of the planet” and create a “national hub” for cryptocurrencies.Bitcoin stock“If he is re-elected. Then in September, the Trump family helped launch a new cryptocurrency company, World Liberty Financial, which it pitched as a way to “make finance great again.” (It remains unclear what services World will offer Liberty Financial).

Global financial freedom was He was met with skepticism By some members of the cryptocurrency industry, who expressed concern that the project could lead to losses among investors and cause permanent reputational damage if it fails. The same logic applies to the TRUMP memecoin. “If this completely blew up in a lot of people’s faces, it would be very bad, because the media attention would be negative,” Bendixen says.

However, despite all the potential consequences, there is nothing stopping Trump from testing the boundaries of what is acceptable in the cryptocurrency space, Silverman says, as others have done before him. Especially him Preparing to reform the Securities and Exchange CommissionThe financial regulatory body that Most strongly followed in the crypto industry Under the previous administration.

“In some ways, he’s just another cryptocurrency entrepreneur,” Silverman says. “He happens to be the boss.”