Here’s Everything Wrong With Them #CriptoNews

Mark Hays is the Associate Director, Cryptocurrency and Financial Technology at Demand Progress Education Fund and Americans for Financial Reform Education Fund.

Days before taking the oath of office, DonaldTrump and his family launched a new cryptocurrency token — known informally as a meme coin — called $TRUMP, as the crypto industry held an inaugural ball. Despite scant details about the coin’s value, use, or risks, trading took off, sending the coin’s price skyrocketing. On paper at least (or on the blockchain, as it were), the Trump family and their businesses are now several billion dollars richer. Not to be outdone, First Lady Melania Trump has also launched her own meme coin. Ivanka Trump, meanwhile, is distancing herself from an unauthorized $Ivanka coin.

While campaigning, Trump promised to make the United States the “crypto capital of the planet” after crypto bros poured over $130 million to elect a crypto-captive administration and Congress. Trump has tapped pro-crypto acolytes for regulatory posts across the federal government and released pro-crypto executive orders to establish a White House crypto working group and prioritize crypto across government. To top it off, the huckster-in-chief launched his $TRUMP meme coin: one part a vehicle for personal profit, one part a playground taunt over federal ethics rules, and one part a crypto-fascist pledge of allegiance. It’s a move that could not only rip off Trump supporters but also significantly corrode the democratic process.

Let’s step back. In case you’re wondering, a “meme coin” is a crypto token based on little more than an online image, slogan, or passing social trend. The crypto industry argues it is a sort of digital collectible. The fine print on the $TRUMP coin website notes that the coins “are not intended to be, or to be the subject of, an investment opportunity, investment contract, or security of any type.” Famous meme coins include Dogecoin (a crypto token based on the image of a dog, originally introduced as a parody of crypto) and various tokens based on the controversial, alt-right mascot Pepe the Frog.

Another recent example is $HAWK, fronted by Haliey Welch, known as the “Hawk Tuah” girl (for her colorful description of an intimate act during an on-the-street interview).

A meme coin doesn’t even purport to do anything (as opposed to other crypto assets, which still have almost no practical uses other than laundering drug money or tax evasion). Most end up being worthless; many are outright “rug pulls” that lure in retail investors with hype, pumping up the value, only so insiders can cash out and leave others holding the bag — as may have been the case with $HAWK, which plummeted 90 percent after its launch.

The $TRUMP fine print requires meme coin buyers to give up their rights to sue, the remedy many $HAWK coinholders are now pursuing. Instead, they would have to go through forced arbitration.

The crypto industry is awash in fraud, but even by its own standards, meme coins are unabashedly scammy. Self-proclaimed serious crypto proponents — including those who blame or mischaracterize the Biden administration’s efforts to regulate crypto and protect investors as the real problem — have sought to publicly dismiss meme coins as not what the crypto industry is really about.

One crypto lobbyist told Politico that the $Trump meme coin was “a horrible look for the industry already trying to make the case that we’re not a bunch of hucksters, scammers and fraudsters.” However, many crypto diehards, including avowed Trump supporters, often discreetly admit on X, on LinkedIn, and in other various corners of the internet that most of the crypto markets are comprised of meme coins, or things like them.

In a just or rational world, the first order of business for the president’s promised crypto working group would be focusing on this $TRUMP coin. The venture presents a mind-boggling number of potential conflicts of interest and signals a financial regulatory apparatus that preys upon rather than protects Americans.

Here are just a few concerns among many:

What the heck is the use case for $TRUMP? If this really is a collectible, like a baseball card, it is difficult to imagine a practical use for $TRUMP other than enjoyment (and you can enjoy the image online and the sideshow for free). You can enjoy them and sell them to other collectors, but you cannot use them in the economy. You could own a $12 million Mickey Mantle card, but you cannot buy a cheeseburger with it. What does being the crypto capital of the world mean if it is only based on gambling on unregulated internet memes?

If $TRUMP is a genuine financial instrument, would any Trump-nominated financial regulator take on the president? If meme coins are really financial instruments with value and meaning to the economy, financial regulators should make sure that coin issuers disclose the risks, that meme coins meet minimum standards to protect investors, and that the tokens are not subject to market manipulation. The Trump organization holds 80 percent of the $TRUMP coins. Will Trump-nominated regulators stand up for investors or kowtow to a president who demands total obedience?

Will Congress’s proposed crypto legislation hold the industry accountable, or just normalize bad behavior, including the issuance of $TRUMP coin? The crypto industry is demanding that Congress pass new legislation to lightly regulate crypto markets, including meme coins like $TRUMP — in place of existing financial rules. Would the president’s support for that kind of bill be contingent on whether it hurts or helps his personal investments?

Could $TRUMP purchases violate ethics rules or the Constitution? Purchases of $TRUMP coin arguably give foreign governments and private interests a virtual, quasi-anonymous way to curry favor with the president, anytime, anywhere. Every investor helps to buoy the price of $TRUMP and thus enriches the president. The Constitution prohibits foreign leaders from giving such gifts without congressional consent, but it would be nearly impossible for the public to discover whether Vladimir Putin, Kim Jong Un, or any other leader bought $TRUMP. Will financial regulators, ethics watchdogs, or Congress prevent the president’s crypto ventures from becoming a fast-track vehicle for corrupt pay-to-play politics? Or will they cash in on the craze themselves?

Trump, more than ever, is an incredibly recognizable brand — from The Apprentice to two successful bids for office. It’s also been associated with a litany of questionable consumer products and investment opportunities.

There are defunct airlines and bankrupt casinos; Trump golf courses, high-rise hotels, and condo developments; eyebrow-raising products like Trump-endorsed bibles and gold sneakers; and now this.

These ventures have often allegedly fleeced their ardent customers. For example, Trump University paid $25 million to settle allegations that its real estate classes were really infomercials that bamboozled its students (without admitting guilt) weeks before he took the oath of office in 2017.

But the critical difference between the prior hucksterisms and this Trump crypto scheme is that it aligns with the interests of rich crypto bros who want to seize the reins of government to make themselves even richer. The crypto industry, led by firms like Coinbase and Ripple, want any action or vote on crypto matters — or even potential nominees’ opinions on crypto matters — to be treated as a political litmus test. And they’re succeeding.

Before the winter holidays, the crypto industry’s lobbying blitz scuttled the renomination of a Securities and Exchange Commission (SEC) member, Caroline Crenshaw. She was first nominated for the Democratic seat by Trump and received unanimous Senate support in 2017. While Crenshaw had expressed some concerns about crypto industry practices, she had taken few formal positions.

But the crypto industry went to the mat against her — including with an ominous box truck ad driven around Washington — not because she was an opponent, but because she did not prostrate herself enough before almighty crypto.

The Trump administration is quickly filling its ranks with crypto- and corporate-friendly appointees to make this more possible. NoCorporateCabinet.org, a project led by Demand Progress Education Fund and the Revolving Door Project, is tracking these figures, and has already identified multiple would-be appointees with potential conflicts of interests, including wealthy businessmen like David Sacks (slated to be the crypto czar, Paul Atkins (Trump’s nominee to lead the SEC), and Howard Lutnick (nominated to lead the Commerce Department).

This crypto power grab has implications beyond crypto. If the crypto bros get their way, it will mean a government with little interest in protecting investors, preventing fraud, holding companies accountable, and making sure people don’t get ripped off by big banks, Wall Street, or financial apps

If crypto prevails and wheedles its way into the broader financial system, the next crypto crash could reverberate across the economy and take out more than just the fleeced crypto investors.

In the meantime, Trump and his family are sitting pretty atop a pile of $TRUMP and $MELANIA meme coins. His supporters may not be so lucky: One $TRUMP coin buyer posted, “This is awful my life is over” on Reddit, with a picture showing they had already lost nearly $700,000 on their Trump Meme investment, due to wild fluctuations in the coin’s price.

If this is the crypto revolution, it sounds like another Wall Street scheme. Who will be left holding the bag?