Senator #ElizabethWarren and Representative Jake Auchincloss recently sent a letter requesting federal regulators to investigate meme coins named Trump and Melania, which were launched on the Solana platform before Donald Trump's second inauguration. Both officials expressed concerns about potential conflicts of interest, risks to consumers, and potential impacts on national security from these cryptocurrencies.

Conflict of Interest Risks and Foreign Influences

The letter points out that the Trump Organization, a company controlled by the #TRUMP family, owns up to 80% of the TRUMP coin, leaving the remaining 20% of investors to bear the volatility of this currency's value. Along with this, the launch of the Melania Meme coin the next day further increases concerns about the wealth of the Trump family as these meme coins help the Trump family increase their wealth by up to $58 billion.

Risk from Foreign Relationships

One of the biggest concerns raised by Warren and Auchincloss is the risk that hostile nations could exploit the purchase of these meme coins to influence the U.S. President in secret and untraceable ways. Additionally, they warned about the possibility of a 'rug pull' situation, where founders could dump the coin after a while, causing significant losses for remaining investors.

Questions That Need Answers

Officials called for agencies such as #SEC and the CFTC to clarify issues related to these meme coins and address important questions, including:

  • What ethical regulations apply to the holdings of $TRUMP and MELANIA of the President and First Lady?

  • Does FinCEN plan to provide an annual report on the trading activities of TRUMP, MELANIA, and other coins from the Trump family?

  • What authority do the SEC and CFTC have in addressing the risks that these meme coins pose to retail investors?

Theory and Reality

Warren and Auchincloss also criticized the entire meme coin industry, arguing that they do not provide any real benefits to the broader financial system. These coins do not help improve payment systems, reduce borrowing costs, or provide benefits to consumers.

Note: Investing in cryptocurrency carries many risks.

Risk, be cautious when participating in this market.