Compiled by: Vernacular Blockchain
Argentine President Javier Milei in Buenos Aires on November 19, 2023
A series of high-profile "Memecoin scams" are raising concerns that the "crypto" craze is damaging Bitcoin's reputation as a sound monetary asset. From the Trump administration's support for TRUMP Token, even the first lady's endorsement of Memecoin, to Argentina's LIBRA scandal, these speculative crazes have repeatedly made headlines, blurring the line between Bitcoin - the digital currency that is likely to become the cornerstone of the 21st century economy - and various pump-and-dump hype projects.
In any case, Bitcoin will not be greatly affected. But what may be difficult to sustain is Trump's plan to reform the regulatory system for digital assets to provide much-needed framework and clear guidance for financial innovators. On the contrary, this administration's naive and indiscriminate promotion of the crypto market is hurting retail investors - this is undoubtedly a bitter reality for the Bitcoin community.
More broadly, the global liberal movement, which has finally made its way to the center of power, may be stigmatized for financial speculation at this critical moment, just when people expect "real adults" to take over. Javier Milei, a learned economist and a staunch supporter of sound money, has promised radical measures such as closing Argentina's central bank and promoting the development of gold and Bitcoin.
Today, as one crypto scam after another is staged, the Bitcoin community's long-standing warnings about "crypto casinos" are being verified. And it's not just the investors who are being ripped off who are the victims. Most new entrants still don't realize the essential difference between Bitcoin and speculative altcoins, and therefore may ignore Bitcoin's potential as a neutral and immutable currency. Now is the time for influential figures and policymakers to make it clear: Bitcoin is the only digital asset that can provide real sustainable value to large institutions and the global economy.
1. The rise and fall of Memecoin
The recent rise and fall of Memecoin has created a lot of excitement, but also a lot of heartbreak. These events have once again demonstrated the serious consequences of conflating Bitcoin with the entire crypto market.
1) Argentina’s LIBRA farce
In Argentina, a crypto project called LIBRA turned into a national scandal almost overnight. In mid-February, newly elected President Javier Milei, a self-proclaimed libertarian and Bitcoin supporter, posted on social media to support the LIBRA Token and promoted it as a private initiative to boost the Argentine economy. Followers and retail investors flocked to the token, and the price of LIBRA instantly soared from $0 to nearly $5.
However, within just a few hours, the price of LIBRA plummeted by more than 80%, falling below $1. Blockchain analysts quickly revealed the reason: internal wallets sold the tokens almost immediately after they went online, cashing out more than $107 million, while ordinary investors could only watch their funds evaporate. The Argentine Fintech Association also admitted that the operating model of this incident was no different from a typical "runaway" scam.
2) Political turmoil breaks out quickly
Opposition congressman Leandro Santoro quickly spoke out, saying: "This scandal has brought shame on us internationally, and we must initiate impeachment proceedings against the president." Milley immediately deleted his promotional post and hurriedly distanced himself from LIBRA, arguing: "I did not know the details of the project, and once I learned the details, I decided not to promote it anymore."
But for the tens of thousands of investors who were stuck, it was a foregone conclusion. A token backed by the country’s top leader turned out to be a “pump and dump” scam, casting a shadow over Argentina’s first president who truly understood economics in at least a century. This farce fully demonstrates how irresponsible cryptocurrency policies can undermine the credibility of an entire political movement.
3) Trump’s TRUMP Token
On the other side of the world, in the United States, an even larger Memecoin craze is taking place, and this time it directly involves the country's top leaders.
In January this year, US President Donald Trump launched an official Memecoin TRUMP on the Solana blockchain. The token was promoted as the "only official Trump Memecoin" and used the credibility of Trump's personal brand and the MAGA (Make America Great Again) movement to create crazy hype before his inauguration.
The extent of this frenzy is extremely rare even in the cryptocurrency market. Within just a few days of its launch, the price of TRUMP soared, with the total market value exceeding $14.5 billion at one point, and the price of a single coin rising to a maximum of about $73. This historic increase coincided with the "Crypto Ball" held in Washington DC, hosted by David Sacks, a technology investor and the Trump administration's "Crypto Tsar."
However, after the party, reality quickly set in. As the crypto event guests were still hungover, TRUMP prices plummeted within a few days. By early February, the token’s price had fallen by two-thirds in just two weeks.
Chainalysis, an on-chain data analysis company, found that the 50 largest holders each cashed out more than $10 million, while about 200,000 retail investors suffered heavy losses in the crash. In the end, insiders made a fortune, while a large number of retail MAGA supporters who may have entered the market because of the "Trump" brand became the receivers.
According to Reuters, Meteora, the trading platform where $TRUMP Token is launched, will rebate the transaction fee to the Token issuer for each transaction. In just two weeks, the team behind TRUMP earned about $86 million to $100 million from transaction fees.
Source: kraken.com, as of February 18
4) Melania Trump’s Memecoin Craze
A few days after the launch of TRUMP Token, US First Lady Melania Trump quickly followed suit and launched a Memecoin using her personal brand. Less than 12 hours before the presidential inauguration, she announced the issuance of her personal Token MELANIA on the Solana blockchain.
Once the token was launched, it immediately triggered a new round of speculative frenzy. Many people who witnessed TRUMP's early investors make a fortune believe that this is their "second chance". Within just a few hours after the release, the price of MELANIA soared 24,000%, reaching a high of about $13, and the total market value reached nearly $1.8 billion in one day.
However, reality soon hit hard. That same weekend, MELANIA plunged 80% from its high to below $3. Similar to TRUMP, MELANIA’s token distribution and issuance intentions have also been questioned. Analysts pointed out that 80% of the TRUMP token supply is held by a single whale address, and MELANIA also faces similar high centralization issues.
5) The First Family’s cryptocurrency hype has been met with bipartisan criticism
The Trumps' cryptocurrency move quickly drew criticism from both sides of the political spectrum. Although the accusation of self-enrichment may be difficult to establish - after all, the Trump family is already extremely wealthy and does not need to rely on quick means of getting rich. However, what is more realistic and disappointing is that Trump's two sons, Donald Trump Jr. and Eric Trump, and the Trump administration's "crypto czar" David Sacks, have shown far less judgment than their positions should have in this series of events.
2. Trump’s Crypto Policy: A Double-edged Sword for Bitcoin
All of the above scandals have one thing in common: they all involve speculative altcoins that rely on hype, insider manipulation, and a lack of transparency, which is the exact opposite of what Bitcoin represents. For years, veterans of the Bitcoin community have been working hard to distinguish Bitcoin from the "crypto market" precisely because they are well aware of the harm that such confusion can cause.
The Bitcoin community quickly distanced itself from these farces. Unlike Bitcoin, whose prices are entirely dependent on “greater fool theory”-style speculation, these altcoins’ prices are completely dependent on “greater fool theory”-style speculation, while Bitcoin is a neutral, decentralized payment network with hundreds of millions of users and a predictable monetary policy. Such scams not only harm investors, but also may tarnish the reputation of the entire digital asset field, and even Bitcoin.
Despite this, the Bitcoin community still hopes that the Trump administration can bring a reasonable regulatory environment, promote innovation in the fintech industry, and accelerate the popularity of Bitcoin. For the millions of Americans who hold Bitcoin, tax reform and increased regulatory clarity are undoubtedly welcome.
However, indiscriminate promotion of cryptocurrencies may do more harm than good. If the public's impression of "cryptocurrency" is limited to these pump-and-dump scams, rather than recognizing Bitcoin's potential in fighting inflation and financial instability, the long-term development of the crypto industry will be seriously hindered. If Trump's so-called "promoting the development of the crypto industry" is just acquiescence or even participation in these hypes, it may eventually trigger a more severe regulatory crackdown. Once the market collapses, the government may regard all digital assets as a source of risk, and even Bitcoin companies and users will not be immune.
Bad regulation often stems from a storm of negative public opinion. If the collapse of LIBRA and TRUMP is used as an excuse for a regulatory crackdown, some policymakers hostile to cryptocurrencies may take the opportunity to target Bitcoin—even though it has no involvement in these scams—and introduce punitive new rules.
3. It’s time to reaffirm your commitment to Bitcoin
It is imperative that a clear policy is developed to encourage the widespread use of Bitcoin as a reserve asset, payment network, and vehicle for innovation. Policymakers and influential figures in the fields of technology and finance have a responsibility to clearly distinguish Bitcoin from "cryptocurrency". Key figures like David Sacks and Chamath Palihapitiya can play a vital role in the current farce.
As a well-known venture capitalist and political donor, Sachs hosted the "Crypto Ball". But instead of focusing on the flashy hype of meme coin parties, these industry thought leaders should use their influence to educate new entrants about the unique value of Bitcoin and remind them of the risks of chasing the surge in altcoins.
As an early investor in Bitcoin, Chamath Palihapitiya has a huge audience. He has publicly stated many times that Bitcoin may be the "ultimate insurance" and will occupy a core position in the future financial system. However, he is also an investor in the Solana ecosystem, which is the technical cornerstone of a series of recent pump and dump scams. This contradictory information is not only confusing, but also undermines the core value of Bitcoin. Given Chamath's influence in Silicon Valley and Wall Street, he is fully capable of explaining to the market: how the basic properties of Bitcoin (scarcity, decentralization, security) make it completely different from those speculative Solana Tokens.
For Sachs, Chamath, and all those who hold influence in tech and finance, their mission should be to use their platforms responsibly. Educating the public may not be as eye-catching as hosting a Crypto Ball or making high-profile predictions about the price of a currency, but it is crucial at this moment. These industry leaders should focus on how Bitcoin can empower the global financial system, such as its practical applications in countries with high inflation or among the unbanked, and contrast it with the empty promises of meme coins. They can push the industry to establish norms, treating Bitcoin as an emerging digital commodity and reserve asset, while unaudited altcoins should be classified as risky stocks or gambling applications. Only in this way can the risk of investors falling for scams be reduced and the market can truly understand the value of Bitcoin.
Now is the time to act. Industry leaders, investors, and policymakers must stand up, demand transparency, expose bad actors, and defend Bitcoin’s value as sound money. Only by clearly supporting Bitcoin and standing firm against scams can the market return to the right track - how Bitcoin can improve society. Silence or compromise at this moment could be costly for investors’ livelihoods and Bitcoin’s future applications.
It's time to make Bitcoin great again.
