On Trump’s Celebrity Coin

I’ve always had a complicated relationship with memecoins. I’ve never invested in one and never will, but understand the appeal. Memecoins are part gambling, part community, and part fun, and those are legitimate pursuits. They are also a commentary on the absurdity of the rest of the financial system, which I’m all for.

I wrote a viral tweet predicting the demise of memecoins before the election, and was so wrong in the immediate aftermath that I forced myself to steelman my beliefs by defending them. My current stance is best summarized by that old saying about free speech: I don’t care for memecoins, but will always defend your right to issue or trade one. Being open and permissionless is one of the core values of crypto, and I’m not going to abandon that principles for things I don’t believe in.

But even I have my limits, and the TRUMP coin bothers me. Not because it was issued by Trump — I welcome a pro-crypto President after the shameful and at-times illegal behavior of the last one towards my industry. And not because it was a memecoin, either. I don’t like TRUMP coin because it’s a bad memecoin, as measured by the values of the category’s biggest believers.

Memecoins have always been described as a joke. But a joke on what? Before 2021, they were a joke on the seriousness of the rest of crypto, an industry with a long history of overpromising and underdelivering. But they took a turn for the serious after the Biden admin’s unscrupulous crackdown and the ways it punished crypto projects that raised money from the public. Most projects bastardized their own ideals to comply, raising money from an elite club of insiders and VCs, and only making their tokens publicly available when it was time for the cabal to sell.

In this regard, memecoins and I actually had something in common: we both hated the hypocrisy of crypto projects that claimed to be building solutions for the people but then turned around and used those same people as exit liquidity. These so-called “VC tokens” mostly collapsed in value after going public, driving jaded investors to memecoins. They may not have had any utility, but at least they had integrity.

The ascent of memes was aided by the virality of a new platform on Solana called Pump.Fun, one that made it easy for anyone to create or invest in memecoins. A big part of Pump’s success was its focus on fairness.

Pump was one of the most used crypto projects last year, and its popularity inspired a new crop of crypto thought leaders who loved to wax poetic about their purity. Their logic captured an internal populism native to the crypto industry: VC tokens were elitist, dishonest, and corrupt; just as speculative as memecoins, but rigged to favor a select few. Memes were for the people. They made poor people rich and created powerful communities. Put differently, memecoins were going to make crypto great again.

Then came the TRUMP token.

TRUMP wasn’t issued through Pump because it couldn’t be, it violated the rules. Insiders kept the vast majority of tokens for themselves. It also has an aggressive vesting schedule that lets them start selling in three months and fully cash out in three years. TRUMP is a memecoin with VC-coin tokenomics, the worst of both worlds.

There are of course many problems with the President of the US issuing such a coin, having to do with conflicts of interest and opportunities for backhanded bribery. There are also dangerous scenarios enabled, like if the tokens get hacked or collected by nefarious actors. It could take all of crypto down with it if it tanks in value, something it’s likely to do eventually given the insane insider allocation. It’s also unclear if some people knew about it (or the follow-up Melania token) ahead of time and benefited from insider information.

But the part that really gets me is how it exposed so many people in my industry as having neither backbone nor integrity.

If you believe that digital assets help solve real problems, then you should be against such a coin. If you don’t believe that they do, but that they still make for a fun casino, you should still be against it. TRUMP isn’t a memecoin, it’s a tool for celebrity monetization. It doesn’t create a new community in the way memecoins like DOGE supposedly do, it extracts value from an existing one. Judging by the explosion of demand, many of those people are new to crypto. It’s not good that their first port of entry is something they are bound to lose money on.

And yet, very few people within the crypto industry publicly criticized it, and the memecoin purists were suspiciously silent. To be fair, the arguments against TRUMP are nuanced and hard to make without resolving to the dimwitted claims of equally exploitative anti-crypto influencers. I also understand that many otherwise decent people in crypto were jaded by the shenanigans of the prior administration. But that’s no excuse. Just because Trump has promised us regulatory clarity for the good kind of crypto doesn’t mean we should overlook the bad kind that TRUMP represents.

So let me state it here once and for all: while Trump may be good for both, TRUMP is bad for crypto and for America, two things that I am quite fond of and otherwise proud to be a part of.

The good news is that, like most bad ideas in crypto, it’s already so big that it will eventually collapse under its own weight. Also like most bad ideas, it will soon attract a gazillion copy pacts, making a mockery of the whole thing. I wouldn’t be surprised if this was the beginning of the end of the memecoin phenomenon for the foreseeable future. I still stand by what I said in my viral tweet, that regulatory clarity will bring the spotlight back to more serious crypto projects.