President Donald Trump’s cryptocurrency venture sparked controversy after his wife, First Lady Melania Trump, launched a competing digital token on the eve of his inauguration, Sunday, January 19, 2025, leading to market instability and raising questions about potential conflicts of interest.
To understand the significance, cryptocurrencies are digital money that exist only on computers and the internet. Unlike traditional money the government issues, cryptocurrencies gain or lose value based on how many people want to buy them. Meme coins are a category of cryptocurrencies that often originate from internet memes, jokes, or trends and are typically created to capitalize on popular culture or famous individuals.
The $TRUMP token works like digital baseball cards – people buy them hoping their value will increase so they can sell them for a profit. The Trump Organization and its partners keep 80% of these digital tokens, meaning they make money from fees every time someone buys or sells them, and they profit if the price goes up.
“Celebrate everything we stand for: WINNING!” Trump proclaimed during his coin’s launch, marking a dramatic reversal from his previous stance where he had labeled cryptocurrency a “scam.” The price of a single $TRUMP token soared to $74.59 before crashing to $38 after Melania announced her competing token. This wild price swing wiped out $6 billion in value for people who bought the tokens.
The market impact was immediate and severe. Trading data revealed extreme volatility, with over $12 billion in trading volume and more than 850,000 unique wallet addresses participating in transactions during the 24 hours following Melania’s launch. A $450 million sell order triggered a cascade of automated selling, contributing to the price collapse.
Both Trump tokens offer unique features to encourage people to hold onto rather than sell them. Called “staking rewards,” investors can lock up their tokens for a set time in exchange for receiving more tokens as a reward. “Yield farming” gives additional tokens to people who help facilitate trading by providing money to trading pools. These mechanisms, common in cryptocurrency markets, generate ongoing fees for the token creators.
The MELANIA token demonstrated similar explosive growth, reaching a total market value of $6.14 billion within two hours of launch. Early investors who bought tokens initially could have made significant profits by selling them at the peak price, while the Trump Organization collected fees from each transaction.
The turbulence extended beyond the meme coins to affect other Trump-related investments. Shares in Trump Media dropped 11% on Tuesday, while Trump-themed Non-Fungible Tokens (NFT) collections saw their floor prices decline by an average of 35%. An NFT is a unique digital certificate registered on a blockchain that proves ownership of a digital asset – like owning the original version of a digital artwork, even though others can still view or copy it.
Digital wallet data showed significant overlap between Trump NFT holders and $TRUMP token holders, suggesting coordinated movement between assets. Major cryptocurrency exchange Binance temporarily suspended margin trading for Trump and Melania tokens due to “extreme market volatility and risk of cascading liquidations.”
The Trump family’s involvement in digital assets extends beyond these tokens. They launched World Liberty Financial, a cryptocurrency investment company, and Trump’s 2024 campaign accepted digital currency donations. His social media platform, Truth Social, has seen its stock price rise dramatically despite struggling to generate revenue. It shows how Trump’s supporter base can drive market values regardless of traditional business performance.
The Securities and Exchange Commission responded to the market chaos by announcing a new crypto task force focusing on three primary areas: market manipulation, investor protection, and regulatory compliance. Recently departed SEC Chair Gary Gensler emphasized the need for comprehensive oversight of meme coins and their potential impact on market stability. The task force will examine cases where coin ownership is concentrated among affiliated entities.
Cryptocurrency industry experts expressed alarm about these launches, comparing buying the tokens to “buying a lottery ticket.” They warned that because Trump-affiliated companies own most tokens and lack real-world use, most profits go to the token creators and early traders, while later investors risk significant losses. Some industry observers even joked that they would miss Gensler, viewing Trump’s promoting speculative tokens as potentially damaging cryptocurrency’s mainstream acceptance.