Another day, another rug pull in the meme coin space following the latest drop that the market experienced on Friday and Monday.

This time, one of the most popular politically-themed meme coins named TrumpCoin (DJT), which was allegedly associated with Donald Trump and his son Barron, came crashing down and lost over 90% of its value yesterday.

 

Bubblemaps, a crypto analytics firm, provided insights into what caused the crash as they flagged a transaction coming out of one of DTJ’s largest holders who controlled nearly 20% of the total supply (likely one of the founders or early investors in the token).

On-chain evidence shows that this wallet dumped all of the tokens it owned – around 2 billion of them – in a single transaction and caused a flash crash that slashed the total market cap of DJT from $55 million to $3 million in just minutes.

These tokens were sent directly by the wallet that minted them when the meme coin was first created.

These situations where an insider dumps such a large amount of tokens in a relatively short period is known in the space as a ‘rug pull’. It is highly damaging to investors as they are defrauded to believe that the initial promoters of the project have their best interest in mind only to find out that they were ultimately victims of a cash grab.

Martin Shkreli and Barron Trump Are the Alleged Backers of DJT

The DJT meme coin has confirmed ties with Martin Shkreli, also known as “Pharma Bro”, the infamous American pharmaceutical entrepreneur behind the Daraprim scandal. One of Donald Trump’s sons, Barron, also seems to have been involved. However, ties to the Trump family were never completely confirmed.

Celebrity-linked meme coins have been on the rise this year as a Solana-based token minting protocol called pump.fun gained popularity. This platform allows users to seamlessly create new digital assets in a few steps and without any coding needed.

Renowned public figures including Iggy Azalea, Caitlyn Jenner, and Doja Cat were among those who tried to take advantage of the fad to monetize their large followings. However, a recent post from Bubblemaps showed that nearly all of these meme coins had already crashed.

DJT was listed among those tokens and linked to Barron – without any confirmation that he was involved. Meanwhile, others like GUNIT – linked to the American rapper 50 Cent – and HULK, endorsed by Hulk Hogan, had already lost 99.9% of their value.

One notable characteristic of all of these investments is that the majority of the tokens were held by insiders. In the case of DJT, the list shared by Bubblemaps showed back then that 67% of the total supply was handed over to those on the inside.

“Supply control is bullish… until they dump on you,” Bubblemaps noted.

Trump’s Sons Tout New Revolutionary Crypto Project Right Before DJT Crashed

Somehow coincidentally, two of Trump’s sons – Donald Jr. and Eric – published bullish comments about the crypto and DeFi space this week.

First came Eric, with an X post where he claimed to have fallen in love with the crypto world and where he invited his 4.5 million followers on the social media platform to “stay tuned for a big announcement.”

Then came Donald Trump Jr. who may have shared the most intriguing post of the two as he said: “We’re about to shake up the crypto world with something HUGE.”

It is unclear who is the “we” in that sentence but it appears that the Trump organization may be getting ready to launch a crypto project as Eric pinned his father’s X account along with that of his company.

If one ties one event to the other, could the collapse of DJT be the result of Barron Trump cutting his ties with the meme coin to fully support his family’s upcoming crypto venture? That’s certainly a plausible theory that would confirm that he was initially involved.

Roger Stone, a well-known supporter of Trump’s political aspirations, said on X that neither he nor his son Barron were involved “in any way” with the DJT meme coin.

Meme Coins Take a Toll During Recent Sell-Off

Meme coins have been performing quite poorly in the past week, primarily influenced by the risk-off move seen in the past few days as a result of recession fears and the measures adopted by the Bank of Japan to raise its interest for the first time in a long time.

djt crashes after insider sells 20% of its total supply
TrumpCoin (DJT) 7-day chart – Source: CoinMarketCap

Notable politically-themed meme coins like MAGA (TRUMP), suffered big blows, with the latter experiencing a 43% drop in the past 7 days alone. Others have seen their market caps evaporate to inconsequential numbers and have left investors with large bags of worthless digital assets.

The largely unregulated digital asset space is considered a Wild Wild West for the sale of unregistered securities.

Most celebrities have underestimated the legal implications of these offerings but there is already precedent of fines and penalties imposed by agencies like the United States Securities and Exchange Commission (SEC).

These have been used to punish those who have taken advantage of bull markets to promote crypto assets without adequately disclosing their interests or the risks involved.

Trump Favors the Crypto Market and Could Use It to His Advantage Again

Following those mysterious tweets from the Trumps, everyone in the meme coin world is asking themselves: what kind of project could the Trump Organization promote? It could either be an official token used to support the former president’s campaign or another non-fungible token (NFT). At this point, it is hard to tell.

Trump is already known for being a vocal supporter of the crypto industry and he even deemed himself the “Crypto President”. Most industry professionals and crypto enthusiasts believe that putting him in the White House would be good for the space, especially since the Democrats maintained a hostile attitude toward cryptos during Joe Biden’s time in office.

Trump picked J.D. Vance, a notable supporter of the industry, as his Vice President. Vance is one of the promoters of a comprehensive legal framework that could help the crypto industry thrive in America.

Trump’s rival, Kamala Harris, has not yet provided specific details about her plans for the crypto industry or her policy views on the matter. If she follows the hard line that her predecessor adopted, she will likely lose the vote of those who believe in the power of this technology.