The era of the Shakedown Economy has officially begun — and it started with something called a presidential “sh--coin.”
No, I am not making this up.
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Two days before his inauguration, Donald Trump abruptly launched a new cryptocurrency, traded as “$TRUMP.” For those unfamiliar, this kind of crypto token or “memecoin” is released and traded on public markets, sort of like a stock. Unlike stocks, however, memecoins have no cash flow, no fundamental value. There’s no claim to a business’s future profits, nor even the pretense of a business model. There’s no clear use case; no one is pretending $TRUMP will be used in real-world transactions to pay for groceries or a haircut, or to send remittances.
Rather, people buy memecoins such as $TRUMP solely because they think someone else might be willing to pay more for them someday. It’s basically a whizbang-sounding Ponzi scheme.
Memecoins (also commonly referred to by that scatological nickname mentioned earlier) originally began as a joke — a commentary on the wildly speculative nature of crypto, invoking some existing internet meme. Among the best-known memecoins are “dogecoin” (named for an internet-famous Shiba Inu) and “Fartcoin” (probably self-explanatory). Today Fartcoin has a market cap of nearly $2 billion.
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Again, not making this up.
The Trumps have been trying to get into crypto for a while, and they saw an opportunity to cash in this weekend. Just as Trump sold his MAGA devotees Trump-branded Bibles and sneakers, he has now sold them a Trump memecoin. Of course, if someone pays $60 for a Trump-branded Bible, they may have overpaid, but at least they got a holy book in exchange; if you lose all your savings on Trump’s memecoin, you have nothing to show for it.
Hopefully at least some buyers are purchasing the coins with their eyes open, to show their support for Trump. And the good news for those who bought $TRUMP early is that the token has shot up in value. It rose from an initial price of about $6 to roughly $75 overnight, before dropping when the family double-dipped with the launch of a second memecoin (“$MELANIA”). As of Monday afternoon, $TRUMP was trading around $40, which is still an enormous gain.
Trump insiders own about 80 percent of the tokens, which means on paper they have made tens of billions of dollars for doing precisely nothing. Even without needing to sell a single coin from their reserve, on the first day the Trump team banked an estimated $58 million on trading fees alone.
The challenge now for anyone who bought these coins is that if they want to cash out, they have to find a greater fool willing to pay more. Will there always be someone willing to buy these magic beans? Probably not. So a lot of unsophisticated traders are likely to lose their shirts on a terrible bet. In other words, Trump has made these latest billions by fleecing his biggest fans.
On the other hand, $TRUMP owners’ losses might be somewhat limited, for an unusual reason. For the next four years, there may be one reliable source of ongoing $TRUMP buyers: individuals, companies and foreign governments that want to curry favor with the president.
This memecoin has now become the easiest, most convenient way to do that. The Saudis no longer need to stay at one of Trump’s hotels — or merely pretend to — to line the president’s pockets; they can flash their digital wallet to show how much they’ve boosted his net worth.
After all, every dollar they put into propping up the value of Trump’s memecoin will effectively add cash to Trump’s bank account, emoluments clause be damned.
Kind of hilariously, even the usual crypto boosters are aghast and have decided that Trump’s memecoins are way too scammy even for them. Some have also pointed out red flags indicating possible insider trading going on with $TRUMP tokens, similar to the scandal plaguing another notorious memecoin (one named after an oral-sex joke that I’ll spare you).
In theory, government regulators could put some safeguards in place — perhaps to protect unsophisticated retail buyers, or wall off certain parties from participating in transactions that would enrich the president without disclosure. But obviously the president now controls crypto regulation. And Trump seems unlikely to appoint regulators who will protect markets from, well, himself. At the very least, he has promised to deregulate the crypto industry more broadly.
Meanwhile, $TRUMP insiders appear to already be transferring some of their tokens to an overseas trading platform that is not allowed to execute trades in the United States. Perhaps they’re positioning themselves to stand outside the U.S. government’s reach anyway.
During his inaugural speech Monday, Trump complained that “for many years, a radical and corrupt establishment has extracted power and wealth from our citizens.” Perhaps his objection was that the old establishment simply wasn’t tech-savvy enough.
No, I am not making this up.
Make sense of the latest news and debates with our daily newsletter
Two days before his inauguration, Donald Trump abruptly launched a new cryptocurrency, traded as “$TRUMP.” For those unfamiliar, this kind of crypto token or “memecoin” is released and traded on public markets, sort of like a stock. Unlike stocks, however, memecoins have no cash flow, no fundamental value. There’s no claim to a business’s future profits, nor even the pretense of a business model. There’s no clear use case; no one is pretending $TRUMP will be used in real-world transactions to pay for groceries or a haircut, or to send remittances.
Rather, people buy memecoins such as $TRUMP solely because they think someone else might be willing to pay more for them someday. It’s basically a whizbang-sounding Ponzi scheme.
Memecoins (also commonly referred to by that scatological nickname mentioned earlier) originally began as a joke — a commentary on the wildly speculative nature of crypto, invoking some existing internet meme. Among the best-known memecoins are “dogecoin” (named for an internet-famous Shiba Inu) and “Fartcoin” (probably self-explanatory). Today Fartcoin has a market cap of nearly $2 billion.
Follow Catherine Rampell
Again, not making this up.
The Trumps have been trying to get into crypto for a while, and they saw an opportunity to cash in this weekend. Just as Trump sold his MAGA devotees Trump-branded Bibles and sneakers, he has now sold them a Trump memecoin. Of course, if someone pays $60 for a Trump-branded Bible, they may have overpaid, but at least they got a holy book in exchange; if you lose all your savings on Trump’s memecoin, you have nothing to show for it.
Hopefully at least some buyers are purchasing the coins with their eyes open, to show their support for Trump. And the good news for those who bought $TRUMP early is that the token has shot up in value. It rose from an initial price of about $6 to roughly $75 overnight, before dropping when the family double-dipped with the launch of a second memecoin (“$MELANIA”). As of Monday afternoon, $TRUMP was trading around $40, which is still an enormous gain.
Trump insiders own about 80 percent of the tokens, which means on paper they have made tens of billions of dollars for doing precisely nothing. Even without needing to sell a single coin from their reserve, on the first day the Trump team banked an estimated $58 million on trading fees alone.
The challenge now for anyone who bought these coins is that if they want to cash out, they have to find a greater fool willing to pay more. Will there always be someone willing to buy these magic beans? Probably not. So a lot of unsophisticated traders are likely to lose their shirts on a terrible bet. In other words, Trump has made these latest billions by fleecing his biggest fans.
On the other hand, $TRUMP owners’ losses might be somewhat limited, for an unusual reason. For the next four years, there may be one reliable source of ongoing $TRUMP buyers: individuals, companies and foreign governments that want to curry favor with the president.
This memecoin has now become the easiest, most convenient way to do that. The Saudis no longer need to stay at one of Trump’s hotels — or merely pretend to — to line the president’s pockets; they can flash their digital wallet to show how much they’ve boosted his net worth.
After all, every dollar they put into propping up the value of Trump’s memecoin will effectively add cash to Trump’s bank account, emoluments clause be damned.
Kind of hilariously, even the usual crypto boosters are aghast and have decided that Trump’s memecoins are way too scammy even for them. Some have also pointed out red flags indicating possible insider trading going on with $TRUMP tokens, similar to the scandal plaguing another notorious memecoin (one named after an oral-sex joke that I’ll spare you).
In theory, government regulators could put some safeguards in place — perhaps to protect unsophisticated retail buyers, or wall off certain parties from participating in transactions that would enrich the president without disclosure. But obviously the president now controls crypto regulation. And Trump seems unlikely to appoint regulators who will protect markets from, well, himself. At the very least, he has promised to deregulate the crypto industry more broadly.
Meanwhile, $TRUMP insiders appear to already be transferring some of their tokens to an overseas trading platform that is not allowed to execute trades in the United States. Perhaps they’re positioning themselves to stand outside the U.S. government’s reach anyway.
During his inaugural speech Monday, Trump complained that “for many years, a radical and corrupt establishment has extracted power and wealth from our citizens.” Perhaps his objection was that the old establishment simply wasn’t tech-savvy enough.
