Senator Elizabeth Warren and Representative Jake Auchincloss have called for a federal investigation into the TRUMP and MELANIA meme coins launched by President Donald Trump and First Lady Melania Trump.
In a joint letter addressed to agencies including the SEC, CFTC, Treasury, and the US Office of Government Ethics, the lawmakers raised concerns about potential ethics violations and untraceable foreign influence tied to the meme coin launches.
Ethics and Foreign Influence Concerns
One of the primary issues highlighted in the letter is the potential for foreign actors, including leaders of hostile nations, to purchase the meme coins and gain untraceable influence over the U.S. President.
“Anyone, including the leaders of hostile nations, can covertly buy these coins, raising the specter of uninhibited and untraceable foreign influence over the President of the United States,” Warren and Auchincloss wrote.
The pair also noted that the Trump family’s net worth surged to $58 billion, largely due to the meme coins, which now account for nearly 90% of the President’s wealth. The Trump Organization reportedly earned $58 million in trading fees from the coins as of Jan. 20.
Market Volatility and Rug-Pull Allegations
Launched on Jan. 18, the weekend before Trump’s inauguration, the TRUMP meme coin skyrocketed to a $10 billion market cap in under 24 hours. However, its value has since plummeted by over 50%, dropping from $73 to $34.
Similarly, the MELANIA token has seen an 80% decline, falling from an all-time high of $13 to $2.56.
Warren and Auchincloss questioned whether the meme coins could be heading toward a rug-pull, citing:
- 80% of TRUMP tokens held by companies affiliated with the Trump Organization, such as CIC Digital and Fight Fight Fight LLC
- A disclaimer that exempts the coins from fraud claims and bars investors from joining class-action lawsuits
The lawmakers expressed concern that these entities could liquidate their holdings, causing massive losses for other investors.
Legal and Regulatory Questions
The letter also criticized the terms and conditions of the meme coins, which describe them as mere symbols of support for Trump’s ideals rather than investment opportunities.
Warren and Auchincloss urged regulators to clarify whether such disclaimers are sufficient to exempt the coins from federal law. They also questioned whether agencies would investigate the coins if investor complaints arise.
Wallet Distribution Analysis
Blockchain analysis firm Chainalysis found that 60 wallets control the majority of funds tied to the TRUMP token. Of these wallets, 77% earned profits worth less than $100, raising questions about the token’s broader impact on small investors.
What’s Next?
The calls for investigation add another layer of scrutiny to the Trump family’s foray into cryptocurrency. With meme coins already facing criticism for their speculative nature, the TRUMP and MELANIA tokens could serve as a litmus test for how regulators address ethical and financial risks in the crypto space.
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