By Andrew R. ChowJanuary 22, 2025 3:48 PM ESTWhen Donald Trump won the presidency in November, many crypto fanatics celebrated, based on his promises to the industry that he would prioritize deregulation and legitimize crypto entrepreneurs. Days before his inauguration, industry heavyweights gathered in Washington for the Crypto Ball, celebrating their newly minted status as D.C. insiders.But during the event, Trump shocked nearly the entire room by posting online about the launch of a new cryptocurrency called TRUMP. This new currency, a so-called meme coin, has no inherent value, but rather fluctuates in price as people buy and sell the coin. Trumps fans and opportunistic day traders have generated billions of dollars in sales, driven by loyalty, hype, and the chance to make a quick buck. All of these trades have made the coins creatorsaffiliate companies of the Trump organizationbillions of dollars on paper. A day after its release, Melania Trump announced her own meme coin, which also rose and fell in crazed spurts. On Wednesday, TRUMP was the 25th most valuable cryptocurrency in the world, according to CoinMarketCapalthough its price of about $43 was well off its $75 high.Read More: What Trumps Win Means for Crypto.Trumps meme coins brought a surge of attention to crypto and many newcomers into the space. To some, the coins signaled Trumps commitment to crypto and to spurring its growth. But many more in the crypto world responded with revulsion to what they saw as a cash grab, and a way for Trump to directly profit off of his followers. Trumps team holds at least 80% of the coins supply, giving them vast power to control its price. While they are not allowed to sell off their holdings for months, doing so would crash the market and leave regular users with a loss.Crypto insiders worry that the coins will make the public even leerier of an industry already filled with scams and bad-faith actors. The crypto sector put someone in power whose first act is to emphasize and take advantage of the opportunity for grift within crypto, says Angela Walch, a crypto researcher and writer. And that's just embarrassing.Trump has downplayed his role in launching the coin, saying at a Jan. 21 press conference: I dont know much about it other than I launched it. The Trump Organization did not immediately respond to a request for comment. A White House press officer declined to comment.But elected officials and legal experts are raising ethical and geopolitical concerns about the tokens, which they say could serve as a vehicle for bribery and conflicts of interest. These coins open a channel for him to receive financial benefits from foreign adversaries and to prioritize his personal interests, to the collective detriment of Americans, says Puja Ohlhaver, a lawyer affiliated with Harvards Allen Lab for Democracy Renovation.What are meme coins?TRUMP and MELANIA are meme coins: cryptocurrencies that are essentially created by entrepreneurs out of thin air by writing code to deploy on a blockchain. Their worth comes from how much people believe in them and buy them. In order to generate excitement, the teams behind such coins often market them using popular memes which can be shared and iterated upon on social media. If memes on social media can propel culture, creativity, and even ideology, the thinking goes, then why shouldnt they be worth something financially as well?Dogecoin and Shiba Inu are two examples, with Dogecoin particularly propelled by Elon Musk, whose tweets about the coin have led to price spikes. The lack of inherent value makes meme coins especially volatile and speculative, which, to some, is part of their appeal: If investors buy at the right time, they can make a lot of money. Conversely, they can lose everything extremely fast if they buy in at the markets top. Meme coins have also been the vehicle for alleged scams, in which investors lost significant sums.Trumps admirers have often wielded memes as a marketing tool. During his presidential campaign, a team of content creators flooded social media with pro-Trump meme content. Last summer, unofficial Trump meme coins with names like Pepe (TRUMP) and Maga People Token (PEOPLE) rose and fell, with some bettors treating them as proxies for his chances of victory.Trump also has a history of using crypto to make money. He started selling NFT trading cards in 2022, and has made millions from them, according to financial disclosure documents. In September, he launched World Liberty Financial, a cryptocurrency platform which is not yet live.TRUMP starts tradingOn Jan. 18, two days before taking the oath of office, Trump launched his token via CIC Digital LLC, an affiliate of the Trump Organization, while the Crypto Ball was in full swing. The move took the industry by surprise. Nick ONeill, a crypto entrepreneur at the eventwhich also featured appearances from Snoop Dogg and Speaker Mike Johnsonposted a video on X saying that very few people there were aware of the token.The next day saw a mad rush to buy and sell the token, causing all sorts of spillover effects. Solana, the blockchain supporting the token, and Coinbase, an exchange used to trade the coin, both experienced hours-long transaction delays. We were not anticipating this level of surge, Coinbase CEO Brian Armstrong wrote on Twitter.Within a day, the team controlling the token, led by CIC Digital, owned tokens worth some $51 billion on paper. (This figure isnt realistic, though, because the more they tried to cash out into actual dollars, the more the price would decrease.). Later that day, however, Melania Trump released her own meme coin, MELANIA, which actually deflated TRUMPs market cap by billions of dollars, as traders appeared to sell their holdings to buy into the new coin. Within an hour of MELANIAs launch, TRUMP fell from above $70 to around $45. A fake BARRON memecoin unassociated with Trumps youngest son also accumulated a $460 million market cap before crashing 95%.Some of Trumps staunchest supporters from the crypto world accused him of predatory behavior in connection with the coins launch. Crypto is supposed to champion the concept of decentralization; the Presidents team controls at least 80% of the TRUMP tokens supply. Another blockchain analytics company, Bubblemaps, found that 89% of MELANIAs token supply was in a single crypto wallet. Conor Gregor, a Coinbase executive, wrote on Saturday that Trumps team had made $58 million in trading fees alone.Trumps credibility has been totally destroyed, wrote Michael A. Gayed, an investment manager. Anthony Scaramucci, Trumps former White House communications director and a crypto evangelist, wrote: No one can honestly think this is good for our society.There's a lot of soul searching in the industry right now, says Walch. Great, we got power, but was it serving any purpose that we originally set out to achieve?Concerns over ethics and national securityCritics outside crypto also raised ethical concerns. Trump now has a direct stake in an industry that he is in charge of regulating. (The controlling companies, which are affiliates of Trumps business, wrote that Trump tokens are not investments or securities but are an expression of support.) The Presidents crypto windfall, critics suggest, disincentivize him to crack down on the industry, which could cause his tokens to decrease in value by billions of dollars. Representative Ro Khanna, a California Democrat who is one of Congresss foremost crypto supporters, wrote on X that Elected officials must be barred from having meme coins by law.Some critics worry that these tokens represent a threat to national security, because they allow foreign agents to buy large amounts of the token as leverage over Trumps policy decisions. These agents could buy tokens to win Trumps favoror threaten to sell them off, which could crash the tokens price. They could also use cryptographic techniques to conceal their identity to everyone in the world but Trump, says Ohlhaver, at the Allen Lab.The Founding Fathers tried to prevent this sort of conflict of interest with the Emoluments Clauses in the Constitution, which prevent a President from using their office to enrich themselves. (At the time, gift giving was a common corrupt practice among European rulers and diplomats.) Some contend that the fact that Trumps token launch happened before he was sworn into office means he was operating as a private citizen. It's less complicated for them to launch these BEFORE he officially becomes President, wrote the crypto journalist Zack Guzmn on X. Claiming Trump is profiting from the Presidency and violating the Emoluments Clause would have been far easier if not.But Ohlhaver contends that as long as Trump owns a share of tokens, theres a significant conflict of interest. He still owns tokens, which will appreciate in price if a foreign adversary pumps it, she says. Ohlhaver also says that the Trump meme coin threatens our public understanding of money at its core. With the rise of social media and global social networks, it's very easy to leverage your status and influence to make a new form of money and legitimize that, she says. Its important for us to maintain our national public goods and make sure that they serve our common interests, rather than the narrow interests of an elite who will benefit tremendously at the expense of everybody else.Andrew R. Chows book about crypto and Sam Bankman-Fried, Cryptomania, was published in August.