Trump heavily reaps crypto韭菜: Over 800,000 investors lose more than $2 billion
TechFlow Selected TechFlow Selected
Trump heavily reaps crypto韭菜: Over 800,000 investors lose more than $2 billion
Trump's price has fallen to less than a quarter of its peak value.
Navigating Web3 tides with focused insightsAuthor: Wu Yu, Jinshi Data
At the beginning of this year, the cryptocurrency $Trump launched by Trump sparked a speculative frenzy in a short period. Early traders made hundreds of millions of dollars through rapid buying and selling, while more than 810,000 investors collectively lost over $2 billion. This incident not only exposed the high risks of the cryptocurrency market but also raised questions about the Trump family profiting from their influence.
Just after 9 p.m. Eastern Time on January 17, less than two minutes after Trump announced the launch of the cryptocurrency $Trump on social media, a crypto wallet identified as 6QSc2Cx purchased 5.97175 million $Trump tokens for $1.096 million, with each token initially priced at just $0.18. Subsequently, the price of $Trump surged rapidly, peaking at $75.
Notably, blockchain records show that $Trump was created at 9:01 a.m. on January 17, but Trump did not announce the news until 12 hours later. Moreover, the account behind the first major public transaction was created about three hours before the token's launch and was funded with cryptocurrency that evening, seemingly preparing to snap up the new tokens.
These precisely timed transactions have raised suspicions among cryptocurrency analysts, who speculate the traders may have used insider information.
According to a report compiled by blockchain analysis firm Chainalysis commissioned by The New York Times, early buyers and insiders reaped enormous profits: an estimated net gain of $6.6 billion! According to another analytics company, Nansen, most early beneficiaries were large buyers, with 31 individuals making $669 million in profit within days.
The Trump family is undoubtedly also a clear big winner. Chainalysis data shows that the Trump family and their partners earned nearly $100 million from transaction fees, although most of it has not yet been cashed out.
However, these quick gains by early traders came at the expense of massive losses suffered by numerous ordinary investors. As the price of $Trump plummeted, investors from over 810,000 cryptocurrency wallets collectively lost more than $2 billion, most of whom were retail investors. As of midweek, $Trump was trading around $17, less than a quarter of its peak of $75.
"Pump-and-Dump" Scheme
Trump triggered this speculative frenzy just three days before his inauguration, and the rapid boom-and-bust cycle has sparked widespread concerns about the risks of so-called "memecoins." Memecoins are cryptocurrencies based on internet jokes or celebrity endorsements.
Several former state and federal financial regulators said the series of events was not surprising. The memecoin industry operates in a way that is essentially legal but largely unregulated. Trading relies on experienced traders buying large amounts early to inflate prices, then selling off their holdings once ordinary investors follow suit, causing the latter to suffer losses.
What particularly worries government regulators and former officials is that as the Trump family profits from this exploitative model, Trump is rapidly pushing to end regulatory crackdowns on cryptocurrency by multiple government agencies.
Corey Frayer, former cryptocurrency advisor at the U.S. Securities and Exchange Commission (SEC), said: "The president is participating in cryptocurrency schemes that harm investors, while appointing financial regulators who will weaken protections for victims—regulators who might protect him and his family from enforcement actions."
The losses from $Trump are very real for hundreds of thousands of investors, including some loyal Trump supporters. Shawn M. Whitson, a 40-year-old small computer repair shop owner from Walnut Cove, North Carolina, celebrated Trump's return to the White House before the inauguration, but by the end of January, he expressed disappointment in Trump, calling the token "a joke."
Over the past six months, Trump and his sons have actively engaged in the cryptocurrency industry multiple times. While promoting cryptocurrencies during his campaign, Trump also helped establish a company called World Liberty Financial, offering a digital currency named $WLFI to wealthy investors with financial market experience.
Last week, Trump Media & Technology Group announced its entry into financial services, launching a brand called TruthFi that offers investment products linked to Bitcoin.
However, the launch of the $Trump memecoin marks the first time the Trump family has directly marketed a new cryptocurrency token to ordinary investors. These products, which saw large early purchases followed by rapid sell-offs, have raised red flags among New York regulators, who refer to such operations as "pump-and-dump" schemes and warn they could lead to significant losses for late-arriving investors.
There is currently no evidence that Trump or his affiliates artificially inflated the price of $Trump or engaged in insider trading.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
