The Trump family's new crypto token has soared in just two days, becoming one of the world's most valuable digital currencies and creating the potential for billions of dollars in payments to the family, but also a storm of questions about conflicts of interest. Also caused new ventures.
President-elect Donald J. Trump announced the launch of a new token, $Trump, on Friday night as hundreds of people gathered for his crypto-inspired inaugural ball not far from the White House.
The venture drew praise from some as a sign that digital currencies are becoming mainstream in the United States.
But economists and even some longtime crypto investors believe that the new digital coins, known as memecoins, represent a breakthrough in the speculative history of crypto trading and the potential dangers it poses to the financial system. He said that there is a possibility that it will emerge as a moment of great change. Meme coins are a type of cryptocurrency associated with online jokes and celebrity mascots.
“I don't really care if people want to gamble,” said Lee Reiners, a former Federal Reserve economist and current lecturer at Duke University's Center for the Study of Global Economic Markets. . “My concern is that when this crypto bubble bursts, and it will burst, it will ultimately impact the entire economy, even for people who are not investing directly in cryptocurrencies. And this new coin is making it even worse.”
Eric Trump, one of Trump's sons who helped launch the token, declined to comment Sunday.
At least on paper, the total trading value of Trump tokens on the market as of Sunday was nearly $13 billion, with a total of $29 billion worth of trades taking place in just two days. This calculation is based on a value of approximately $64 for each of the 200 million tokens issued, according to industry data tracker CoinGecko.
This suggests that as of Sunday, Trump's coin was the 19th most valuable cryptocurrency in the world, CoinGecko's tally showed.
Trump affiliates appear to control an additional 800 million tokens, with a value that could, at least hypothetically, be worth $51 billion, a total that would put Trump among the richest people in the world. I'll be left alone.
Before the coin began trading, Forbes magazine listed Mr. Trump's net worth at $6.7 billion, with much of it coming from Trump Media & Co., another speculative business the Trump family helped launch. It comes from a technology group that runs loss-making social media platform Truth Social.
But if Trump moves to sell a large number of his coins, his newfound crypto assets are likely to evaporate. New cryptocurrencies often skyrocket in price, making traders millionaires on paper, but collapse when holders of the coins start selling.
This is especially true for meme coins, whose prices tend to fluctuate rapidly as their popularity fluctuates on the internet. Prices can also vary between platforms, making it difficult to determine the actual value of a coin. In 2021, one of the first meme coins, a dog-based digital currency called Dogecoin, created overnight millionaires but lost much of its value just as quickly.
The launch of the Trump meme coin caught many of the industry's power brokers off guard.
When the president-elect announced the coin on Friday night, hundreds of the industry's most powerful executives sipped cocktails and tuned in to Snoop Dogg at the inaugural party in Washington, dubbed the “Crypto Ball.” was singing. (An executive who attended the ball said he was “frustrated” that coin trading began while industry leaders were “not paying attention,” making it difficult to make a profit.) )
Nevertheless, some traders have already made profits.
Cryptocurrency traders accumulated $1 million in positions within a minute of the coin's launch, according to an analysis of public trading data by crypto data firm Bubble Maps, which posted its findings on social media.
The coin's price skyrocketed, and trader accounts quickly sold off $20 million worth of holdings. The analysis sparked speculation on social media that insiders who had advance knowledge of the coin launch could have profited quickly. (Bubble Map did not immediately respond to a request for comment.)
Connor Grogan, a director at Coinbase, one of the largest trading platforms in the United States, said in a social media post that as of Saturday, the Trump team has committed to all of President Trump's sales, even if he doesn't sell. It was estimated that he earned $58 million in fees. Own reserve of tokens on open marketplace.
Grogan also noted that the Trump team may have transferred some of the tokens to an overseas trading platform called Bybit, which is not allowed to conduct transactions in the United States. Bybit has recently been the focus of enforcement actions by international crypto regulators.
The launch of Trumpcoin quickly created new opportunities for executives, crypto traders, and even major corporations to curry favor with the Trump administration.
Anyone can spin up a memecoin for a few dollars, but the majority of tokens cannot be bought or sold on mainstream digital currency markets. Mainstream digital currency markets often focus on larger, more established coins. However, within hours of Trump's announcement, cryptocurrency exchange Kraken began offering the new coin, and the largest exchange in the United States, Coinbase, also announced it would list the new coin.
Coinbase and Kraken are fighting a lawsuit brought by the Securities and Exchange Commission, which has launched a sweeping crackdown on crypto companies under the Biden administration. The companies are among a large group of crypto companies that stand to benefit from a looser approach to technology regulation that Trump promised during his campaign.
Trump, once a cryptocurrency skeptic, last year welcomed the digital currency industry, speaking at major industry conferences and pledging to turn the United States into “the crypto asset of the planet.”
After winning the election, Trump made a series of moves that appear poised to benefit the crypto industry. He selected someone with a track record of working closely with crypto companies to lead the SEC, and appointed crypto enthusiast and venture capitalist David Sachs to oversee the administration's crypto and artificial intelligence policy.
At the Crypto Ball, Sachs declared from the stage that “the reign of crypto terror is over and the beginning of crypto innovation in America has just begun,” according to a video posted on social media by Eric Trump.
The president-elect's family was personally investing in the cryptocurrency market even before meme coins were launched. In September, he and his sons helped launch World Liberty Financial, a cryptocurrency business that also operates a related digital coin, WLFI.
World Liberty is not directly owned by the Trump family. However, Trump is a promoter of the business and receives a cut of the profits from the token sale.
For the most part, the crypto industry has responded enthusiastically to Trump's crypto ventures. But some executives expressed concerns this weekend that the memecoin launch would hurt amateur traders.
A popular crypto podcaster called it a “free cash grab” and “bad for humanity.” Prominent Bitcoin investor Eric Voorhees wrote on social media that memecoins are “stupid and embarrassing.”
Still, the Trump family's support for cryptocurrencies shows no signs of waning.
“It’s time to celebrate everything we stand for: a victory!” Trump wrote Friday as he announced the birth of a new crypto token. “Join my special Trump community. Get your $TRUMP now.”
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