Meme coins have become a profitable new business for President Donald Trump’s family company. The Trump-branded digital tokens are part of a broader push by the Trump Organization – which is managed by Mr. Trump’s sons, and in which the president holds a majority ownership stake – into cryptocurrency, a form of digital money that Mr. Trump once derided but now embraces.
Ahead of his Jan. 20 inauguration, Mr. Trump began promoting two meme coins, $TRUMP and $MELANIA, to his supporters. $TRUMP’s market value spiked after its launch to $14 billion; it is now valued around $2 billion. The token got a boost late last month when it was announced that the top 220 holders of the coin, in value, would be invited to a May 22 dinner with the president at Trump National Golf Club in Virginia, with the top 25 also invited to a “Private VIP Reception” with Mr. Trump.
Democrats have criticized the Trump family’s various crypto ventures as selling access to and profiting from the presidency. Sens. Jeff Merkley and Chuck Schumer proposed legislation on May 6 to bar the president, vice president, administration officials, members of Congress, and their families from issuing or sponsoring crypto coins and currencies.
Why We Wrote This
Top investors in the meme coin $TRUMP will get to dine with President Donald Trump. The move is raising ethical questions, with defenders saying he’s breaking no law, while some Democrats call his family crypto ventures “profoundly corrupt.”
“Currently, people who wish to cultivate influence with the president can enrich him personally by buying cryptocurrency he owns or controls,” said Senator Merkley. “This is a profoundly corrupt scheme. It endangers our national security and erodes public trust in government. Let’s end this corruption immediately.”
Non-American holders of $TRUMP appear to be among those vying to win dinner with the president, according to an analysis by Bloomberg, raising concerns about foreign influence – as well as how invitees will be vetted. The organizers, a Trump-affiliated entity called Fight Fight Fight LLC, said that a background check would be mandatory. Foreigners are legally barred from donating to U.S. election campaigns and candidates.
In a recent interview with NBC News’ “Meet The Press,” Mr. Trump claimed he wasn’t profiting from his family’s crypto businesses. Asked if he had made money from his meme coin, he said “I haven’t even looked.” Last Sunday, asked about Democratic lawmakers’ accusations, he said that the U.S. needs to “dominate” crypto so that China doesn’t, but didn’t speak to his family’s involvement.
What is a meme coin?
Meme coins are digital tokens based on popular internet memes. Unlike cryptocurrencies such as Bitcoin, meme coins aren’t forms of money and are marketed as collectibles, similar to baseball cards, that are traded within a dedicated community. But they also double as speculative investments. Their value is highly volatile, even compared to Bitcoin.
Dogecoin began as a meme coin that Elon Musk referenced with the creation of the Department of Government Efficiency, or DOGE. Other coins feature cartoon characters or AI-generated images. Millions of meme coins are created and traded every year.
How do meme coins generate profits?
Coin issuers earn money on sales and from trading fees. Since they cost virtually nothing to issue, the upside can be substantial, though most meme coins are thinly traded or not at all.
More controversially, speculators who get early access to meme coins that soar in value can sell at higher prices, typically before coins plunge in value. Unlike stocks or other securities, meme coins aren’t regulated and issuers don’t have to provide disclosures to buyers. Critics say this allows for market manipulation by insiders who can time their buying and selling.
Traders who bought $MELANIA in the minutes before it was first promoted on social media earned nearly $100 million in profits, according to an analysis by the Financial Times. In the minutes before Melania Trump formally announced the token’s launch on Truth Social on Jan. 19, a small group of traders bought $2.6 million worth of coins. Most were then sold within 12 hours.
The creators of $TRUMP include the Trump Organization and a Wyoming-based group called Celebration Cards LLC, whose ownership is opaque. The Trump-related entities are estimated to have already earned hundreds of millions of dollars from the sale and trading of the token. The entities also hold 80% of the 1 billion tokens that are being created, a holding potentially worth billions of dollars. Under the issuance rules, these tokens are subject to a lockup period that restricts when they can be sold.
What are the ethical concerns raised by Mr. Trump’s coins?
Mr. Trump already licenses a range of goods, from books to sneakers, that have generated substantial profits for his political committees and other entities he controls. A digital coin is no different, and while it may not seem appropriate for an acting head of state to make money on the side, it isn’t clear that any laws have been broken.
Holding an auction for a private reception with the president – as the $TRUMP contest does for top coin holders – raises more ethical and legal concerns, however. The Constitution’s foreign emoluments clause bars presidents from accepting foreign gifts. In his first term, Mr. Trump was accused of violating this law but the Supreme Court dismissed the case after he left office.
Even if all the $TRUMP contest winners are U.S. citizens, the auction is offering access to the president based on holdings of an asset issued by his family’s company. Critics say this amounts to “pay to play” corruption using an untraceable digital currency.
Republican Sen. Cynthia Lummis of Wyoming, an ally of both Mr. Trump and the crypto industry, expressed concern about the contest. “This gives me pause,” she told NBC News, adding that Congress needs to set rules for meme coins and other digital assets. “This is the Wild West, and so when I hear things like this, my reaction is, we need to legislate so there are rules.”
Others say that while the meme coin contest may be unseemly, it’s no different from other fundraising efforts that have promised access to the president. In the 1990s, President Bill Clinton was criticized for inviting friends and supporters who had donated to the Democratic National Committee to stay overnight in the White House.
That the $TRUMP holders are putting money into a private company and not a political committee may be a distinction without a difference, says Carol Goforth, a law professor at the University of Arkansas who studies the regulation of cryptocurrencies. Paying for a dinner seat “is the model for campaign finance and you’d be naive for thinking that this isn’t working in a similar way.”
Asked about the contest at the White House briefing Friday, Press Secretary Karoline Leavitt said Mr. Trump “is abiding by all conflict of interest laws. The President has been incredibly transparent with his own personal financial obligations throughout the years.”
What other crypto ventures does the Trump family have?
Mr. Trump’s sons control World Liberty Financial, a cryptocurrency company that launched last year and has marketed a currency called $WLFI. It recently issued a stablecoin, a digital currency tethered to a traditional currency. Last month, a state-backed investment firm in the United Arab Emirates acquired $2 billion in World Liberty Financial’s stablecoin. It reportedly plans to invest it in Binance, a cryptocurrency firm that pleaded guilty in 2023 to violations of U.S. federal law and paid a $4 billion penalty.
This transaction has been criticized by Democrats. In a joint letter to the acting director of the Office of Government Ethics, Sen. Elizabeth Warren and Senator Merkley warned that World Liberty Financial “could be used as a backdoor for foreign kickbacks and bribes.” They also pointed to possible violations of the emoluments clause because MGX, the Emirati investment firm, has close ties to a foreign government.
“The deal, if completed, would represent a staggering conflict of interest, one that may violate the Constitution and open our government to a startling degree of foreign influence,” they wrote.
Eric Trump, speaking to Bloomberg TV during a visit to the UAE where he promoted World Liberty Financial, denied that he was coordinating with his father. “There are no conflicts because I don’t work with the White House,” he said.
How does the U.S. government regulate cryptocurrency?
As head of the executive branch, Mr. Trump oversees the agencies that regulate finance, including cryptocurrencies. His appointees have taken a far more hands-off approach to the industry than the Biden administration did. For example, the Securities and Exchange Commission has eliminated a crypto enforcement program and dropped ongoing lawsuits and investigations into prominent crypto exchanges and trading platforms.
Paul Atkins, the new SEC chair appointed by Mr. Trump, is seen as a pro-crypto regulator who has previously consulted for the industry. “We’re seeing a profound shift in outlook” at the SEC, says Professor Goforth.
Similarly, the Department of Justice has issued guidance that could benefit the industry. An April 8 directive from Deputy Attorney General Todd Blanche instructed prosecutors not to pursue criminal charges involving digital currencies unless they involved criminal organizations, drug cartels, or terrorist groups. Crypto has become a staple of online scams and extortion rackets.
Congress is in the process of coming up with a regulatory framework for stablecoins, which would represent a victory for the crypto industry, which has become a significant source of campaign contributions. The Senate Banking Committee voted last month to move the bipartisan GENIUS Act for a full vote. The act, which the Senate is expected to vote on before the Memorial Day recess, would establish clear rules for stablecoin issuers and make it easier to hold and invest in the tokens.
The revelations about the Trump family’s stablecoin transactions led to calls this week for Democrats to block the bill unless it has stronger anti-corruption provisions. Instead, the legislation proposed by Senators Merkley and Schumer will be put up for a stand-alone vote before the GENIUS Act. Its prospects for passage are dim, however, as it is unlikely to attract any Republican support.
