The Trump family's new crypto token grew into one of the most valuable forms of digital currency in the world in just two days, creating the potential for a multi-billion dollar payout to the family, but also a storm of questions about conflicts of interest arose. the new company creates.
President-elect Donald J. Trump announced the launch of the new token, $Trump, on Friday evening as hundreds of people gathered for a cryptocurrency-inspired inauguration ball not far from the White House.
The venture was hailed by some as a sign of how digital currencies are now becoming mainstream in the United States.
But economists and even some longtime crypto investors said the new digital currency known as a memecoin could also become a milestone in the speculative history of crypto trading and the potential dangers it poses to the financial system. Memecoins are a type of cryptocurrency associated with an online joke or celebrity mascot.
“If people want to gamble, I don't really care,” said Lee Reiners, a former Federal Reserve economist who is now a lecturer for a center that studies global economic markets at Duke University. “My point is that when this crypto bubble bursts – and it will – it will ultimately impact people across the economy, even if they don't have direct investments in crypto. And this new currency makes it even worse.”
Eric Trump, one of Mr. Trump's sons who helped launch the token, declined to comment Sunday.
At least on paper, the Trump tokens on the market on Sunday had a total trading value of almost $13 billion, and in just two days a total of $29 billion in transactions had taken place. That calculation is based on the value of nearly $64 of each of the 200 million tokens issued, according to CoinGecko, an industry data tracker.
This suggests that Trump's coin was the 19th most valuable form of cryptocurrency in the world as of Sunday, the CoinGecko count indicated.
The Trump affiliates appear to control another 800 million tokens that, at least hypothetically, could be worth as much as $51 billion — a total that would make Mr. Trump one of the richest people in the world.
Before the coin hit the market, Forbes had put Trump's net worth at $6.7 billion, most of which came from the Trump Media and Technology Group, another speculative venture that the Trump family helped start and which has fueled the money-losing social media platform Truth Social runs.
But Trump's new crypto wealth would likely evaporate if he started selling off his hoard of coins. New cryptocurrencies often skyrocket in price, turning traders into billionaires on paper, only to collapse when holders of the coins start selling.
This is especially true for memecoins, which are prone to rapid price fluctuations as their internet popularity fluctuates. Prices can also vary between platforms, making it difficult to determine the true value of a coin. In 2021, one of the first memecoins, a dog-based digital currency called Dogecoin, made millionaires overnight, but just as quickly lost much of its value.
The launch of the Trump memecoin has caught many industry power brokers off guard.
When the president-elect announced the coin on Friday evening, hundreds of the industry's most influential executives drank cocktails and sang along with Snoop Dogg at an inauguration party in Washington dubbed the Crypto Ball. (One executive who attended the ball said he was “annoyed” that trading in the currency had started while industry leaders were “not paying attention,” making it difficult for them to make a profit.)
Nevertheless, some traders have already cashed in.
Within a minute of the coin's launch, a crypto trader had built a $1 million position, according to an analysis of public transaction data by crypto data firm Bubblemaps, which posted its findings on social media.
The price of the coin soared, and the merchant's account soon sold off assets worth $20 million. The analysis sparked speculation on social media about whether an insider with prior knowledge of the coin's launch could have made a quick profit. (Bubblemaps did not immediately respond to a request for comment.)
Conor Grogan, president of Coinbase, one of the largest trading platforms in the United States, estimated in a social media post that the Trump team had made $58 million in fees on all $Trump sales on Saturday – even without selling. its own reserve of tokens for the open market.
It also appears that the Trump team is transferring some of its tokens to an overseas trading platform called Bybit, which is not allowed to transact in the United States, Mr. Grogan noted. Bybit has recently been the focus of enforcement actions by international cryptocurrency regulators.
The launch of the Trump coin immediately created new opportunities for executives, crypto traders and even major corporations to curry favor with the Trump administration.
Anyone can spin a memecoin for a few dollars, and the vast majority of tokens are not available to buy and sell on mainstream digital currency markets, which often focus on larger, more established coins. But within hours of Mr. Trump's announcement, the cryptocurrency exchange Kraken began offering the new coin, and Coinbase, the largest exchange in the United States, said it would also offer it.
Coinbase and Kraken are fighting lawsuits brought by the Securities and Exchange Commission, which carried out a broad crackdown on crypto companies during the Biden administration. The companies are among a large group of crypto companies that stand to benefit from the more relaxed approach to technology regulation that Mr. Trump promised during his campaign.
Once a crypto skeptic, Trump embraced the digital currency industry last year, delivering a speech at a major industry conference in which he pledged to turn the United States into the “crypto capital of the planet.”
After winning the election, Mr. Trump has taken a series of steps that appear to benefit the crypto industry. He chose someone to lead the SEC who has a track record of working closely with crypto companies, and brought in venture capitalist David Sacks, a digital currency enthusiast, to oversee crypto and artificial intelligence policy for his administration.
At the Crypto Ball, Mr. Sacks announced from the stage that “the reign of terror against crypto is over and the dawn of innovation in America for crypto is just beginning,” according to a video posted to social media by Eric Trump.
The president-elect's family was personally invested in the crypto market even before the launch of the memecoin. In September, he and his sons helped start a crypto company, World Liberty Financial, which also has a digital currency linked to it, WLFI.
World freedom is not directly owned by the Trumps. But Mr Trump is a promoter of the company and he receives a share of the profits from the token sale.
For the most part, the crypto industry has responded enthusiastically to Mr. Trump's crypto ventures. But some executives raised concerns this weekend that memecoin's launch would ultimately hurt amateur traders.
A popular crypto podcaster called it a “gratuitous cash grab” that would be “bad for humanity.” Erik Voorhees, a prominent Bitcoin investor, wrote on social media that the memecoin was “stupid and embarrassing.”
Yet the Trump family's embrace of cryptocurrencies shows no signs of slowing down.
“It's time to celebrate everything we stand for: WINNING!” Mr Trump wrote this on Friday when he announced the birth of the new crypto token. “Join my very special Trump community. GET YOUR $TRUMP NOW.”
