A wave of memecoin scams is shaking confidence in the cryptocurrency market. Investors are losing millions, and many now view crypto as a risky and untrustworthy space. Recent scandals involving political figures have made the situation worse, giving crypto a bad name.
Memecoins are cryptocurrencies based on internet jokes or trends. They often gain value through social media hype rather than real-world use. Unlike Bitcoin, which is known for security and transparency, memecoins are highly speculative and often poorly regulated.
Because their value depends on hype, memecoins can rise and fall quickly. Scammers often take advantage of this by creating “pump-and-dump” schemes. In these memecoin scams, they promote the coin to drive up its price, sell their shares for profit, and leave investors with worthless tokens.
Political Memecoins That Failed to Deliver Value
In the past few months, political figures have contributed more to memecoin scams. Some major tokens tied to world leaders collapsed, costing investors billions. Here are some of them:
$TRUMP and $MELANIA Memecoin Scammed Retail Investors
Former U.S. President Donald Trump launched the $TRUMP memecoin, claiming it was the only official Trump token. The coin soared in value to $14.5 billion in market capitalization. But within days, the price crashed by nearly 70%. Reports showed that large investors, known as whales, sold their holdings at the peak, leaving smaller investors with losses.
Shortly after, Melania Trump introduced the $MELANIA token, which gained 24,000% in hours. However, the token’s price soon collapsed by 80%. Blockchain analysts found that most of the tokens were controlled by a single wallet, raising concerns about price manipulation.
$LIBRA Wiped Out $4.4 Billion in Market Value
In Argentina, the $LIBRA token became a national scandal. President Javier Milei, known for his support of Bitcoin, tweeted about $LIBRA as a project to help Argentina’s economy. The token’s price jumped from $0 to nearly $5 as investors rushed to buy.
But within hours, the price dropped by over 80%. Analysts discovered that insider wallets sold $107 million worth of tokens before the crash. The collapse wiped out $4.4 billion in market value, leaving thousands of investors with losses. Milei denied involvement and deleted his tweet, but the damage to trust was already done.
$CAR Token Drained Millions from Investors
The $CAR memecoin came into limelight after the Central African Republic (CAR) President Faustin-Archange Touadéra announced the project on X. The post described the token as a way to “unite people” and “support national development.”
However, the project quickly collapsed into controversy. The official $CAR X account was suspended, and its website was taken down. Cybersecurity firm Scam Sniffer found phishing links in the project’s Telegram group. These phishing links were even listed on major crypto data aggregators, including CoinGecko.
The founder of Scam Sniffer alerted CoinGecko, which then removed the fraudulent link.
On-Chain Data Shows Investors Dumped Bitcoin and Ethereum to Buy Memecoins
Analysis of on-chain exchange flows for Bitcoin (BTC) and Ethereum (ETH) supports the view that many investors sold their BTC and ETH to fund memecoin purchases. The data reveals a clear pattern of capital rotation from major cryptocurrencies into speculative assets like $TRUMP, $LIBRA, and $MELANIA.
A large spike in exchange inflows for both Bitcoin and Ethereum occurred on Feb. 3, coinciding with the peak of memecoin hype. Investors typically send BTC or ETH to exchanges when they intend to sell or swap for other tokens, indicating many were preparing to buy memecoins. For Ethereum (ETH), inflows surged above 3 million ETH, while Bitcoin (BTC) inflows reached over 60K BTC on the same day.
Bitcoin (BTC) inflows on exchanges reached over 60K BTC on Feb.3. Source: CryptoQuant
