U.S. Senator Elizabeth Warren (D-MA) faces reporters during a break at the bipartisan Artificial Intelligence (AI) Insights Forum for all U.S. Senators at the U.S. Capitol on September 13, 2023 in Washington.
Julia Nicholson | Reuters
Two top congressional Democrats have asked multiple regulators to investigate the legitimacy of meme coins issued by President Donald Trump and First Lady Melania Trump.
Massachusetts Sen. Elizabeth Warren and Rep. Jake Auchincloss raised questions about the first couple using their respective offices to enrich themselves and possible “pull” scams, similar to What happens with other such tokens, such as and possible conflicts of interest.
“We are deeply concerned about President Trump and First Lady Melania Trump’s decision to launch two meme coins, $TRUMP and $MELANIA, which would allow them to His presidency was marked by extraordinary profits.
“These tokens will not create new faster, cheaper, more secure ways to pay. These tokens will not help people borrow money more affordably. They will not improve the financial system for consumers in any way,” they added.
These digital tokens have created billions of dollars in paper value for the Trump family.
this website TrumpCoin states that 80% of the supply is held by the Trump Organization and its affiliates.
The digital token launched almost immediately on Friday night enhanced The president’s personal net worth has increased by tens of billions of dollars on paper. It currently trades at around $37, down 50% from its peak shortly after launch. Likewise, the $MELANIA token has plummeted 80% from its weekend highs and is currently trading below $3.
Memecoins are a subset of cryptocurrencies associated with internet meme culture. They have no intrinsic value and often see prices skyrocket due to celebrity endorsements. While these coins are popular among cryptocurrency traders, they are known to be highly volatile as they lack any underlying asset to back their value.
Lawmakers cited a number of high-profile volatile meme coins, such as Hailey Welch’s “Hawk Tuah” product as well as Dogecoin, Pikamon and Bunkercoin.
Before first family launches token, New York Department of Financial Services Issue consumer warnings A warning has been issued against “emotion-based virtual currencies” or meme coins, highlighting their extreme volatility, lack of regulation and high risk of fraud, including pump-and-dump schemes. The department warned that these tokens are often controlled by a small group of insiders, created on unlicensed platforms, and are prone to serious price manipulation.
To prevent an immediate sell-off, the $TRUMP and $MELANIA tokens are subject to a multi-year vesting schedule, ensuring that most tokens are not liquidated all at once. But even without selling any tokens, ex Coin library CEO and cryptocurrency analyst Conor Grogan, estimate On the first day alone, the Trump team generated $58 million in transaction fees.
“This meme coin could hurt the very people President Trump says he is trying to help,” Warren and Auchincloss wrote. They added that the president and his related business entities could potentially be unlocked within three years. Insider dumped their coins, “making huge amounts of money” for themselves while simultaneously crushing the price of the coins for his supporters.
CNBC.com has reached out to the Trump campaign for comment.
Owner Rights and Other Issues
The Democratic leader also noted that the terms and conditions of the two meme tokens “prevent purchasers from joining a class action lawsuit against the tokens or their issuers.”
The letter, sent to leaders at the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Treasury Department and the U.S. Office of Government Ethics, also highlighted potential conflicts of interest.
As president, Trump is responsible for nominating the leaders of major financial regulatory agencies such as the Securities and Exchange Commission and the Commodity Futures Trading Commission, which are responsible for enforcing laws against cryptocurrency companies.
Warren and Auchincloss added: “This creates an unavoidable conflict of interest, as he can both benefit directly from the token sales and set policy on how these markets are regulated.”
Since his victory in November, Trump has focused on appointing government leaders who support the cryptocurrency industry.
Paul Atkins nominated to serve as SEC chairman. Atkins is a former SEC commissioner known for advocating for market-friendly policies and opposing heavy-handed regulation. If confirmed, he would succeed Gary Gensler, whose aggressive enforcement of cryptocurrency regulations has made him a controversial figure in the industry.
Earlier this week, the U.S. Securities and Exchange Commission announced the creation of a new “Cryptocurrency Task Force,” led by Commissioner Hester Peirce. Trump’s choices to lead the Commerce and Treasury departments also support cryptocurrencies in their business dealings.
In addition to financial risks, the letter also expressed concerns about national security.
The global and largely anonymous nature of cryptocurrency markets could allow foreign actors to purchase large amounts of Trump or Melania coins to gain influence over the government. Lawmakers warned that this could violate the Constitution’s Emoluments Clause, which prohibits government officials from accepting payments or gifts from foreign entities without congressional approval.
“But these coins can be purchased by almost anyone in the world, raising concerns that foreign individuals and governments are using these coins to buy influence over President Trump and his family,” the letter said.
