Sen. Richard Blumenthal speaks during a forum on President Donald Trump’s crypto dealings on July 27, 2026, in Washington, DC.<\/span><\/div>\nFinn Gomez\/Getty Images<\/p><\/div>\n<\/div>\n<\/div>\n<\/div>\n
Specifically, the Senate Democrats expressed concern that the memecoin effort could be a \u201crug pull.\u201d<\/p>\n
In the wild west of the crypto world, a rug pull is a con job where developers pump up the value of a token and then suddenly vanish with the investor funds. By pulling the rug out from investors\u2019 feet, the tokens are worth little to nothing.<\/p>\n
In a CNBC interview last month, Trump defended his crypto profits. He said he followed the law and authorized his sons to oversee his personal finances while he\u2019s in office.<\/p>\n
\u201cI\u2019m a really good business person. I\u2019ve made money. I made a tremendous amount of money, more than I would have ever thought I would have made,\u201d Trump told CNBC. \u201cAnd I let people invest it, I don\u2019t even speak to \u2014 I don\u2019t even know who they are, but it\u2019s given to big firms\u2026 my son Eric handles it.\u201d<\/p>\n
TRM Labs, a blockchain intelligence company,\u00a0found\u00a0in January 2025 that while hefty insider allocation in the Trump memecoin highlights the need for \u201cmeticulous oversight,\u201d the project \u201cdoes not have the hallmarks of a rug pull.\u201d<\/p>\n
Ari Redbord, a former federal prosecutor and US Treasury official who is now global head of policy at TRM Labs, told CNN that the January 2025 analysis still holds true that the Trump memecoin was not set up as a rug pull.<\/p>\n
\u201cThat does not mean it is okay how it has played out,\u201d he said.<\/p>\n
Redbord pointed to how this token was concentrated in a small number of hands and price support eroded gradually, instead of all at once.<\/p>\n
\u201cA small group of early buyers and the coin\u2019s creator profited. Most of the people who bought in later lost money, and lost it at scale,\u201d he said. \u201cEighty percent of supply sitting with a small group of investors and close to a million retail buyers absorbing the losses, is going to look worse with time, not better, whether it was a rug pull or not.\u201d<\/p>\n
Warren and Blumenthal suggested in their letter that the Trump memecoin could be a \u201csoft rug pull,\u201d one where the support is pulled more gradually.<\/p>\n
There is debate over whether the SEC even has jurisdiction to investigate alleged rug pulls in the crypto world.<\/p>\n
Days before Trump took office in 2025, the\u00a0SEC charged\u00a0a New York blockchain engineer with perpetrating a \u201crug pull fraud.\u201d However, in late February 2025, weeks into the Trump administration, the SEC\u00a0issued new guidance\u00a0that clarified that a memecoin is not a security.<\/p>\n
\u201cNeither meme coin purchasers nor holders are protected by the federal securities laws,\u201d the SEC said in that guidance.<\/p>\n
But the SEC also said this guidance does not apply to products that are simply labeled memecoins \u201cin an effort to evade the application of the federal securities laws by disguising a product that would otherwise constitute a security.\u201d<\/p>\n
In other words, regulators will evaluate each coin on a case–<\/strong>by–<\/strong>case basis.<\/p>\nWarren and Blumenthal argue Trump\u2019s memecoin is one of those cases to evaluate.<\/p>\n
\u201cThe SEC must investigate whether a fraudulent scheme may be underway, and prevent further extraction of enormous value from the hundreds of thousands of investors who put their faith in Trump\u2019s coin,\u201d the lawmakers wrote on Monday.<\/p>\n","protected":false},"excerpt":{"rendered":"
New York \u2014 Days before his inauguration in 2025, president-elect Donald Trump did something unusual: He launched a memecoin. That memecoin briefly exploded in value \u2013 and then crashed in … <\/p>\n","protected":false},"author":1,"featured_media":3333,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23,21,22,1,5,20],"tags":[],"class_list":["post-4592","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-aita","category-daily-article","category-reddit-stories","category-story","category-story-daily","category-viral-story"],"_links":{"self":[{"href":"https:\/\/nextstoryus.com\/index.php?rest_route=\/wp\/v2\/posts\/4592","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nextstoryus.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nextstoryus.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nextstoryus.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nextstoryus.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=4592"}],"version-history":[{"count":1,"href":"https:\/\/nextstoryus.com\/index.php?rest_route=\/wp\/v2\/posts\/4592\/revisions"}],"predecessor-version":[{"id":4593,"href":"https:\/\/nextstoryus.com\/index.php?rest_route=\/wp\/v2\/posts\/4592\/revisions\/4593"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nextstoryus.com\/index.php?rest_route=\/wp\/v2\/media\/3333"}],"wp:attachment":[{"href":"https:\/\/nextstoryus.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=4592"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nextstoryus.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=4592"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nextstoryus.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=4592"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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