As they nibbled miniature lobster rolls and sipped mezcal cocktails, the well-heeled guests toasted the coming reign of Donald Trump.
The Silicon Valley glitterati, social media ‘influencers’ and financiers had gathered on the Friday before the presidential inauguration for the Crypto Ball in Washington DC, where VIP tickets cost $100,000. They had much to celebrate.
Cryptocurrencies (digital ‘tokens’ that can be traded and are designed to be used as payment methods) were going mainstream. And those who’d backed them were going to make their fortunes.
Back in July, Trump had promised to make America the ‘crypto capital of the planet’ by enacting new laws to pave the way for financial institutions and pension funds to invest in these controversial and risky assets, bringing them the respectability that has so far eluded them.
But then news started to filter out that night which horrified guests. Far from making crypto respectable, the new president had just opportunistically unveiled his own cryptocurrency, dubbed ‘$TRUMP’, that could undermine everything they had worked so hard for.
The Trump ‘coin’ was just created in digital code out of nothing – but suddenly it was worth billions.
In a get-rich-quick scheme seemingly without parallel, the new ‘currency’ – with no intrinsic value, no utility and no purpose seemingly beyond adding to the President’s wealth – soon made Trump and his companies $58billion richer, at least in theory, with its 200 million available coins trading at $75 a piece.
That is about twice the market capitalisation of Britain’s largest supermarket chain Tesco – making him, briefly, one of the 25 richest people in the world.
Almost at a stroke, Trump increased his personal fortune nearly tenfold. It looked like the most sensational scheme for personal enrichment that the political world had even seen.
This vast fortune was, alas, only on paper, and predicated on the value of the horde of remaining coins that Trump holds, which are admittedly unlikely to retain their value.
When Trump promoted his coin to his 99 million followers on X that Friday, it was trading at $7, having risen from just a few cents.
By Sunday, it had soared to more than $75, although it later lost more than half its value before levelling out at a value of $27. There were unverified claims that one mysterious investor had bought more than $1million in coins just seconds after Trump’s announcement on social media – standing to make a gargantuan profit.
Could that have been a member of the Trump clan? Who knows?
After its fall in value, Trump said of his cryptocurrency on Tuesday: ‘I don’t know much about it other than I launched it, other than it was very successful.’
So what was Trump doing? Why does he believe that having his own ‘currency’ is a good idea? And what happens next?
The president’s former adviser Anthony Scaramucci accused his ex-boss of ‘Idi Amin level corruption’, a reference to the notoriously corrupt Ugandan dictator and kleptocrat.
Even his supporters were dismayed by what this signified – just days before his inauguration as president, Trump was jumping on the bandwagon of a scandal-plagued industry that he has previously dismissed as a ‘scam’.
Once upon a time, The Donald shared Wall Street’s widespread scepticism about cryptocurrencies, insisting in 2019 that they ‘are not money’ and ‘based on thin air’, and – without regulation – ‘can facilitate unlawful behaviour, including drug trade and other illegal activity’.
But more recently, and after $130million of election campaign funding from the crypto world, he had promised to dismantle the regulatory hurdles holding the industry back.
Certainly, in creating his own coin he showed breathtaking chutzpah.
While some well-established digital currencies, such as Bitcoin and Ethereum (with a total valuation of over $2trillion and $400billion respectively) can be used to buy some goods and services including Tesla cars, $Trump is of a far lesser category, a so-called ‘meme coin’. These, almost by definition, are a joke – even if fortunes can be made, and more often, lost on them.
There are hundreds of different meme coins, whose names are often inspired by popular internet characters or events.
The first, launched in 2013, and a favourite of Elon Musk, was ‘Dogecoin’, based on a famous picture of a Japanese dog.
Last October saw the launch of ‘Fartcoin’, which as the name implies was also a light-hearted creation but which – thanks to the explosion in cryptocurrency values caused by Trump’s election – reached a total value of $2.5billion, before falling back to $1.5billion.
Celebrities – including media personality and former decathlete Caitlyn Jenner, singer Jason Derulo and controversial influencer Andrew Tate – have plunged in with their own versions. Meme coin creators have faced accusations of scamming investors with a ‘pump and dump’, in which a coin’s creators hype it up before launch – encouraging naive investors to pile in – then sell their tokens at a huge profit.
As with those who sink real money into higher profile cryptocurrencies such as Bitcoin and Ethereum, investors have no protection if it all goes belly up.
Experts warn that many young people are investing in meme coins, believing they’re an easy way to make money, only to lose their investment.
In a notorious case last month, a young Tennessee blonde woman named Haliey[CORR] Welch, who briefly became a social media star dubbed the ‘Gen Z Dolly Parton‘, was accused of insider trading – which she denied – after her ‘Hawk’ coin collapsed in value from a nominal $500million to $28million shortly after it was launched.
As with other other cryptocurrencies there’s only a finite number (1 billion) of the $Trump coins: 200 million are already in circulation, and the remaining 800 million will be gradually released for sale over the next three years.
Two days after the launch of $Trump, his wife took to social media to announce: ‘You can buy $MELANIA now.’
The release of his wife’s meme coin seemed to put paid to the notion of the seriousness of the $Trump coin, and may have contributed to its fall in value. Melania’s offering was itself less of a success, crashing to $2.30 from a high of $13.
Trump and his businesses own 80 per cent of both the $Trump coin and the ‘$Melania’ coin. In the event that investors lose their savings, the terms and conditions of both the Trump and Melania coins specifically bar buyers from suing the creators.
To outsiders, meme coins will sound very silly – and risky – indeed. And yet the row over the president’s version has thrown up the first serious controversy of his second term in the White House.
Trump, who flogs endless MAGA-themed merchandise – from ‘Victory cologne’ to ‘God bless the USA’ Bibles – was once again accused of exploiting his supporters’ enthusiasm for his own financial gain. Any of his followers thinking of investing their life savings would stand to lose rather more than the $50 cost of one of his trademark Make America Great Again caps.
The Trump family, who have faced relentless accusations of enriching themselves from Donald’s first term, are showing a growing interest in digital currencies.
Trump has credited his entrepreneurial youngest child, Barron, 18, with educating him about crypto. The pair, together with Barron’s half-brothers Donald Jr and Eric, are heavily involved in a crypto business, World Liberty Financial, which Trump announced last September and which also has its own tradeable coin or ‘token’. On its website, the company vows to ‘leverage the global reach and recognition of the Trump brand’ to promote crypto.
Fears about the $Trump coin go far beyond the risk of investors being left short-changed. Critics insist the president has created a new (and ingenious) vehicle for his supporters to give him money – risking corruption on an epic scale.
Now anyone wanting to curry favour with him could quietly fill the Trump family coffers by buying the coins and pushing up its price.
Democrat congresswoman Maxine Waters, who sits on the House Financial Services Committee, said: ‘Trump has created a way to circumvent national security and anti-corruption law, allowing interested parties to anonymously transfer money to him and his inner circle.’
Anthony Scaramucci said that the ‘most dangerous thing’ about the Trump meme coin is that now ‘anyone in the world can essentially deposit money’ into the President’s bank account with just a few clicks. ‘Every favour – geopolitical, corporate or personal – is now on sale.’
Putting money into $Trump coins would lend his political backers a degree of plausible deniability: this is not a bribe, they could say, we believed we were investing in an asset that was going to appreciate in value.
Walter Shaub, a former government ethics watchdog who clashed with Trump during his first term, predicted that his behaviour would be even more shameless in his second. ‘The very idea of government ethics is now a smouldering crater,’ he said bleakly.
‘Now, you can get your piece of history,’ proclaims the blurb for the President’s meme coin on its website. ‘This Trump Meme celebrates a leader who doesn’t back down, no matter the odds.’
Whether Trump is forced to back down over his new currency remains to be seen.
