Donald Trump, who promised during his election campaign to make the United States the global crypto capital, launched his own cryptocurrency just days before his inauguration. While this may appear to be a positive signal for the crypto industry, the project bears all the hallmarks of a classic “pump and dump” scheme. The manipulation sees an asset’s price artificially inflated (“pumped”) through an aggressive media campaign, often sending the paper value of the asset skyrocketing by thousands of percent — only for the primary beneficiary to sell off (or “dump”) their holdings, leaving ordinary investors to absorb the losses. Trump has created an unprecedented conflict of interest: on one side, he profits from his own token, and on the other, he is responsible for shaping the regulatory environment in which the industry operates. And of course, there is also the reality that investments in tokens can provide a convenient avenue for concealing corruption.
When Donald Trump announced the launch of his cryptocurrency — with the ticker $Trump — many assumed that his account had been hacked. However, it soon became clear that the newly elected leader of the United States had indeed launched his own memecoin — in the dead of night, on the weekend just before his inauguration.
According to the Trump Meme official website, $Trump is designed to “express support” for the president rather than serve as an investment tool. However, that didn’t stop people from trying to cash in. Initially priced at just 18 cents, Trumpcoin skyrocketed to over $75 amid massive hype and surging demand. This rapid rise made the coin one of the fastest-growing cryptocurrencies in the world, propelling it into the top ranks by market capitalization. In just 24 hours, it surpassed long-standing projects with genuine (by cryptocurrency standards) functionality that had taken years to develop.
Within a day, it was revealed that Melania Trump would also have her own memecoin — $Melania — designed solely to “express support” for the First Lady. Once again, large sums of money flooded into the Trump family coins, and in less than 24 hours, the value of Melaniacoin soared by a factor of 256.
The crypto market, however, views these coins as more than mere tokens of support — it sees them as a gesture of goodwill from the president toward the cryptocurrency industry, which faced significant regulatory hurdles under Joe Biden's administration. During his campaign, Trump promised to make the United States the global crypto capital, to establish a national cryptocurrency reserve, and to introduce regulations favorable to the industry.
In December, Trump announced plans to appoint a “crypto czar” to his administration: David Sacks, a podcaster and former PayPal COO, who will also oversee the development of artificial intelligence. “He will safeguard Free Speech online, and steer us away from Big Tech bias and censorship,” Trump declared. “He will work on a legal framework so the Crypto industry has the clarity it has been asking for, and can thrive in the US.”
The sharp rise in the cryptocurrency market’s overall capitalization following Trump’s election victory in November has been widely attributed to the perception that his actions signal a shift from words to deeds. The creation of personal coins is seen as tangible proof of his commitment. However, the economic model behind these tokens — i.e. their tokenomics — raises serious questions.
The official documentation for Trumpcoin states that only 20% of the maximum token supply was initially released to the market. The remaining 80% is controlled by CIC Digital LLC, a subsidiary of the Trump Organization, and Fight Fight Fight LLC. These tokens are set to be gradually unlocked and introduced to the market in batches over the next three years. The companies involved are entitled to “revenue derived from trading activities” — a thinly veiled way of saying they will sell these tokens. In effect, Trump can fully capitalize on the cryptocurrency’s issuance while serving as president.
A similar pattern emerges with the First Lady’s cryptocurrency, albeit on a smaller scale. Twenty-five percent of the tokens have already entered the market. Another 35% will be unlocked gradually over the next year, with the revenue going to the development team. The remaining 40% will remain in the project treasury with no clearly defined purpose.
In both cases, ownership concentration is extremely high, which, as with any other asset, poses significant risks for investors. These tokens are highly vulnerable to planned manipulations and sudden, unforeseen price changes.
In 2021, Trump called Bitcoin a “scam,” yet now he has launched his own cryptocurrency — one that appears far less thoughtfully designed than Bitcoin.
In 2021, Trump called Bitcoin a “scam,” yet now he has launched his own cryptocurrency — one that appears far less thoughtfully designed than Bitcoin
What’s happening with the Trump family’s memecoins already resembles the classic cryptocurrency scam known as “pump and dump” — a remarkably simple yet effective scheme. “Pump and dump” can be applied to any asset so long as those promoting it have access to media. In the crypto market, an investor or group of investors either creates a new cryptocurrency or buys up large quantities of an existing coin — the cheaper and the more obscure, the better. They then generate artificial hype around the asset through deceptive marketing and advertising.
The influx of investments quickly inflates the cryptocurrency’s value to unjustifiable levels, at which point the scheme’s organizers start offloading their holdings, causing the price to crash. Innocent investors are left holding worthless tokens while the scammers count their profits.
Due to the lack of robust cryptocurrency market regulations, such schemes are not illegal in the United States, although they are widely recognized as unethical. Organizers are not always held accountable, which is why these operations often involve celebrities to enhance their credibility.
“Pump and dump” schemes are absolutely unethical, but they are not illegal in the U.S.
Television star Caitlyn Jenner faced a class-action lawsuit from dissatisfied investors who claim she misled them into purchasing the failed cryptocurrency token Jenner. Frustrated investors allege that Jenner exaggerated the token’s potential value and “deliberately failed to register” it with the Securities and Exchange Commission (SEC), depriving them of critical risk information. The market capitalization of Jenner plummeted from a peak of $7.5 million in early June 2024 to just $170,000 today.
One of the world’s top football players, 2018 World Cup champion Kylian Mbappé, became the target of a “pump and dump” scheme. Although Mbappé likely wasn’t involved with the scammers, they created the Mbappe coin and hacked his official X account through a sophisticated phishing attack. The token’s value skyrocketed, reaching a multimillion-dollar market capitalization, only to collapse to zero. Hackers managed to siphon off more than $600,000 before Mbappé’s account was restored. Victims, however, suffered far greater losses, with one investor losing over $1 million.
Hackers profited $600,000 from Mbappe, while one investor lost $1 million in a single blow
Most cryptocurrencies struggle with low liquidity, which poses challenges for large stakeholders looking to cash out. However, the daily trading volume of Trumpcoin reaches dozens of billions, making liquidity relatively easy to access. Selling token holdings to Trump’s companies would thus present little difficulty.
At the current price of $27 for Mr. Trump’s coin — and $2.50 per token Mrs. Trump’s coins — Donald’s holdings are worth over $21.6 billion, while Melania’s are valued at approximately $875 million. While large-scale sales would drive the price down significantly, it is conceivable that the Trump family could still profit handsomely from their hype-fuelled venture. For context, Forbes estimates Trump’s total net worth outside of this memecoin at $6.2 billion.
However, a sudden price drop could cause significant reputational damage to both Trump and the cryptocurrency industry as a whole. The volatility of this token is stark: within just two days of its launch, its price halved — just after Melania’s memecoin hit the market. As a result, investors lost tens of millions of dollars. These two tokens alone attracted billions in capital in just 48 hours, much of it flowing from other projects. This is why a “dump” in line with the scheme would result in massive losses across the industry.
The financial losses suffered by credulous supporters of Donald Trump are not the only issue with the memecoin. Eric Trump, who helps manage the Trump Organization’s business operations, has openly stated that the Trump family has entered the new and growing cryptocurrency sector, and it is clear that the coin is an attempt to profit from the presidency. “It is literally cashing in on the presidency — creating a financial instrument so people can transfer money to the president’s family in connection with his office,” says Adav Noti, executive director of the Campaign Legal Center. “It’s blatantly unethical knowing that a bunch of [supporters] will lose money — and that money ends up in your pocket,” says Christopher Bendiksen, a researcher at crypto asset management firm CoinShares, “Especially when you are holding the presidency of the United States.”
It’s not exactly ethical to pocket the money that your supporters lose — especially if you’re the President of the United States
Norman Eisen, former White House ethics advisor, said that of all Trump’s scandals, this one could be the most serious. “He’s launching a major, multi-billion-dollar project in the growing crypto industry, where he has the most serious conflict of interest between what he stands to gain and his responsibilities in regulating this industry — an industry in which he is now involved,” explains Eisen. “This could be the most significant conflict of interest in modern presidential history.”
This may represent the single worst conflict of interest in the modern history of the presidency
Trumpcoin, like other cryptocurrencies, guarantees anonymity. This raises additional ethical concerns, as it could potentially serve as a tool for bribery. By investing significant sums into an asset in which Trump has a major personal stake, individuals and organizations could gain favor with the president while avoiding scrutiny. Transactions occur quickly and anonymously on the blockchain, creating entirely new channels of influence and leverage.
Despite these alarming implications, there seems to be little standing in the way of the U.S. president pushing the boundaries of what is acceptable in the crypto sphere. This is especially true now that Trump has installed his own appointee to lead the Securities and Exchange Commission, an agency that, under the previous administration, had worked diligently to impose order on the crypto market.