US President Donald Trump is spearheading the cryptocurrency industry and even launched his official meme coin, $TRUMP, just days before his inauguration last month.
The $TRUMP meme coin soared over 1000% in days to £60 before steadily declining to hover around £12.93 today.
Crypto forensics firms like Chainalysis carried out a blockchain study on behalf of the New York Times, finding that over 810,000 investors, including many Trump supporters, lost over £1.61 billion after the meme coin nosedived.
The New York Times highlighted that the total losses were likely much higher because the blockchain data analysis didn't include figures from some top crypto marketplaces.
The Ongoing Exploitative Pattern of Crypto Pump and Dump
The legal but unregulated meme coin industry often follows a pattern in which sophisticated traders make early buys to pump the token prices before dumping their holdings as less experienced investors join the rally.
New York state regulators warned consumers about these offerings, stating that "creators or their associates artificially inflate the price of the coins and then sell their own coins rapidly at an inflated price, reaping substantial profits while causing the price to crash."
The regulators call these patterns "pump-and-dump schemes," which can leave late buyers with big losses. The Trump family could stand to profit from these meme coins as the President works to undo the regulatory crackdown on the crypto industry.
However, no evidence indicated that Trump or his associates artificially inflated the $TRUMP meme coin's price or engaged in insider trading.
31 Early $TRUMP Traders Netted £540M
The reconstruction of early trades by crypto experts revealed that some traders, including foreign traders, made big $TRUMP meme coin purchases right when the President formally announced the launch on his social media handles.
Analysis revealed a 12-hour gap between creating the $TRUMP meme coin contract address and the official launch. Furthermore, several new wallets emerged during that time, scooping up millions of tokens within minutes of launch before dumping most of their holdings in a matter of days, raking in massive profits.
A crypto wallet with a unique ID beginning with 6QSc2Cx bought over 5.9 million at £0.15 each and walked away with a two-day profit of over £88 million. The person behind this trade was among other professional traders who rapidly bought and sold a significant portion of the token supply.
Further digging revealed that almost 31 early large traders made over £540 million in total profits in the early days of the $TRUMP coin. Moreover, Chainalysis found that nearly 700,000 crypto wallets cashed out early for profits close to £5.33 billion. The high trading volumes helped the Trump family make close to £80.79 million in trading fees.
"The president is participating in shady crypto schemes that harm investors while at the same time appointing financial regulators who will roll back protections for victims and who may insulate him and his family from enforcement," says Corey Frayer, a former US Securities and Exchange Commission staff member.
Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.
