Author: Dave Birnbaum

Compiled by: Bai Hua Blockchain

Javier Milei, the President of Argentina, in Buenos Aires on November 19, 2023

A series of high-profile "Memecoin rug pulls" are raising concerns that this "crypto" frenzy is damaging the reputation of Bitcoin as a stable monetary asset. From the Trump administration's backing of the TRUMP Token, to the First Lady's Memecoin, to the LIBRA scandal in Argentina, these speculative manias have repeatedly made headlines, blurring the lines between Bitcoin - the digital currency that could well become the economic bedrock of the 21st century - and the various pump-and-dump schemes.

Nevertheless, Bitcoin itself will likely not be too severely affected. What may not survive, however, is the Trump administration's plan to reform the regulatory framework for digital assets, providing the much-needed clarity and guidance for financial innovators. Instead, the government's naive, indiscriminate endorsement of the crypto market is hurting retail investors - a bitter reality for the Bitcoin community.

More broadly, the global libertarian movement has finally gained a foothold in power centers, only to risk being tainted by financial speculation at a critical juncture, just as people were hoping for "grown-ups" to take charge. Javier Milei, a learned economist and a staunch supporter of sound money, had promised radical measures such as shutting down the Argentine central bank and promoting the development of gold and Bitcoin.

Now, one crypto scam after another is unfolding, validating the Bitcoin community's long-standing warnings about the "crypto casino." The victims are not just the investors who got rug-pulled. Most newcomers still fail to grasp the fundamental distinction between Bitcoin and speculative Altcoins, potentially overlooking Bitcoin's potential as a neutral and immutable currency. It is time for influential figures and policymakers to make it clear: Bitcoin is the only digital asset that can truly deliver sustainable value for major institutions and the global economy.

1. The Rise and Fall of Memecoins

Recently, the boom-and-bust cycles of Memecoins have created a huge frenzy, as well as countless heartbreaks. These events once again demonstrate the severe consequences of conflating Bitcoin with the entire crypto market.

1) The LIBRA Fiasco in Argentina

In Argentina, a crypto project called LIBRA almost overnight turned into a national scandal. In mid-February, the newly elected President Javier Milei - a self-proclaimed libertarian and Bitcoin supporter - posted on social media endorsing the LIBRA Token, touting it as a private initiative to boost the Argentine economy. Milei's followers and retail investors flocked to it, and the LIBRA price instantly skyrocketed from $0 to nearly $5.

However, within just a few hours, LIBRA plummeted over 80%, dropping below $1. Blockchain analysts soon revealed the reason: internal wallets had dumped massively right after the Token's launch, cashing out over $107 million, while ordinary investors could only watch their funds evaporate. The Argentine Fintech Association also acknowledged that the operation resembled a typical "rug pull" scam.

2) A Political Firestorm Erupts

Opposition MP Leandro Santoro quickly spoke out, saying: "This scandal has embarrassed us internationally, and we must initiate impeachment proceedings against the President." Milei promptly deleted his promotional posts and hastily distanced himself from LIBRA, claiming: "I was not aware of the details of the project, and once I learned about them, I decided not to promote it further."

But for the thousands of investors left holding the bag, the damage was done. A Token backed by the highest state leader had ultimately proven to be a "pump-and-dump" scheme, casting a shadow over Argentina's first truly economically literate President in at least a century. This debacle fully demonstrates how irresponsible crypto policies can undermine the credibility of an entire political movement.

3) Trump's TRUMP Token

On the other side of the globe, in the United States, an even larger Memecoin frenzy is unfolding, this time directly involving the nation's highest leader.

In January, US President Donald Trump launched an official Memecoin TRUMP on the Solana blockchain. The Token was promoted as the "one and only official Trump Memecoin," and it was hyped up using Trump's personal brand and the trust in the MAGA (Make America Great Again) movement, just before his inauguration.

The level of frenzy was unprecedented even by crypto market standards. Within days of its launch, the TRUMP price skyrocketed, reaching a market cap of over $14.5 billion at its peak, with the token price hitting around $73. This historic surge coincided with the "Crypto Ball" event in Washington D.C., hosted by tech investor and Trump administration's "Crypto Tsar" David Sacks.

However, the party soon came to an end. As the Crypto Ball guests were still nursing their hangovers, the TRUMP price plummeted. By early February, just two weeks later, the Token had lost two-thirds of its value.

Chainalysis found that the top 50 holders each cashed out over $10 million, while around 200,000 retail investors suffered heavy losses. In the end, the insiders made a killing, while the large number of MAGA supporters, likely attracted by the "Trump" brand, were left holding the bag.

According to Reuters, the Meteora exchange that listed the $TRUMP Token charged a fee rebate to the Token issuer on every trade. In just two weeks, the team behind TRUMP raked in an estimated $86 million to $100 million in trading fees.

Source: kraken.com, as of February 18

4) Melania Trump's Memecoin Frenzy

Just days after the TRUMP Token launch, the First Lady Melania Trump also quickly jumped on the bandwagon, using her personal brand to release a Memecoin of her own. Less than 12 hours before the presidential inauguration, she announced the launch of the personal Token MELANIA on the Solana blockchain.

The Token immediately sparked a new wave of speculative frenzy. Many who had witnessed the early TRUMP investors' massive gains saw this as their "second chance." Within just a few hours of the launch, the MELANIA price skyrocketed 24,000%, reaching a high of around $13, with a market cap approaching $1.8 billion in a single day.

However, reality soon struck back. Over the same weekend, MELANIA plummeted 80% from its peak, dropping below $3. Similar to TRUMP, the distribution and issuance intent of the MELANIA Token also came under scrutiny. Analysts pointed out that 80% of the TRUMP Token supply was held by a single whale address, and MELANIA faced a similarly high degree of centralization.

5) The crypto hype of the "First Family" faces bipartisan criticism

The crypto moves of the Trump couple have quickly drawn criticism from both parties in the US political arena. Although the outside world's accusations of self-enrichment may be difficult to substantiate - after all, the Trump family is already extremely wealthy and does not need to rely on quick-rich means. However, what is more realistic and more disappointing is that Donald Trump Jr. and Eric Trump, the two sons of Trump, as well as David Sacks, the "crypto czar" of the Trump administration, have shown judgment far less mature than the maturity their positions should possess in this series of events.

2. Trump's Crypto Policy: A Double-Edged Sword for Bitcoin

The above scandals have one thing in common: they all involve speculative Altcoins that rely on hype, insider manipulation and lack of transparency, which is completely contrary to the ideals represented by Bitcoin. For years, veteran members of the Bitcoin community have been working to distinguish Bitcoin from the "crypto market" because they know well the harm this confusion may bring.

The Bitcoin community quickly distanced itself from these scandals. Unlike Bitcoin, the prices of these Altcoins are completely dependent on speculative hype of the "greater fool theory", while Bitcoin is a neutral, decentralized payment network with hundreds of millions of users and follows a predictable monetary policy. These scams not only harm investors, but may also tarnish the reputation of the entire digital asset field, even affecting Bitcoin.

Nevertheless, the Bitcoin community still hopes that the Trump administration can bring a reasonable regulatory environment, promote innovation in the fintech industry, and accelerate the popularization of Bitcoin. For the millions of Americans holding Bitcoin, tax reform and improved regulatory transparency are undoubtedly welcome.

However, indiscriminately promoting cryptocurrencies may do more harm than good. If the public's impression of "cryptocurrencies" is limited to these pump-and-dump scams, rather than recognizing Bitcoin's potential in combating inflation and financial instability, the long-term development of the crypto industry will be seriously hindered. If Trump's so-called "promoting the crypto industry" is just to tacitly or even participate in these speculations, it may eventually lead to more severe regulatory crackdowns. Once the market collapses, the government may view all digital assets as sources of risk, and even Bitcoin businesses and users may not be spared.

Poor regulation often stems from a negative public opinion storm. If the crashes of LIBRA and TRUMP are used as an excuse for regulatory crackdowns, some policymakers who are hostile to cryptocurrencies may take the opportunity to target Bitcoin - even though it has not participated in these scams - and introduce punitive new regulations.

3. It's Time to Reaffirm the Commitment to Bitcoin

The top priority is to formulate a clear policy that encourages the widespread application of Bitcoin as a reserve asset, payment network, and innovation carrier. Policymakers and influential figures in the tech and finance fields have a responsibility to clearly distinguish Bitcoin from "cryptocurrencies". In the current scandal, key figures like David Sacks and Chamath Palihapitiya can play a crucial role.

As a well-known venture capitalist and political donor, Sacks hosted the "Crypto Ball". But instead of focusing on the flashy hype of meme coin parties, these industry thought leaders should use their influence to educate new entrants on the unique value of Bitcoin and remind them of the risks of chasing the meteoric rise of Altcoins.

Chamath Palihapitiya, an early investor in Bitcoin, has a large audience. He has publicly stated that Bitcoin may be the **"ultimate insurance" and will occupy a core position in the future financial system. However, he is also an investor in the Solana ecosystem, which is the technical foundation of a series of recent pump-and-dump scams. This contradictory message not only confuses people, but also undermines the core value of Bitcoin. Given his influence in Silicon Valley and Wall Street, he is fully capable of explaining to the market how Bitcoin's fundamental attributes (scarcity, decentralization, security) make it fundamentally different from those speculative Solana Tokens.

For Sacks, Chamath, and all influential figures in the tech and finance fields, their mission should be to responsibly use their platforms. Compared to hosting Crypto Ball or making high-profile price predictions, the work of educating the public may not be as eye-catching, but it is crucial at the moment. These industry leaders should focus on explaining how Bitcoin empowers the global financial system, such as its practical applications in high-inflation countries or the unbanked population, and contrast it with the empty promises of meme coins. They can drive the industry to establish norms, treating Bitcoin as an emerging digital commodity and reserve asset, while untested Altcoins should be classified as risky stocks or gambling applications. Only in this way can the risk of investors falling into scams be reduced, and the market can truly understand the value of Bitcoin.

Now is the time to take action. Industry leaders, investors, and policymakers must stand up, demand transparency, expose misconduct, and defend the value of Bitcoin as a sound currency. Only by clearly supporting Bitcoin and resolutely opposing scams can the market's focus be brought back to how Bitcoin can improve society. Silence or compromise at this moment may come at a high cost for the livelihoods of investors and the future applications of Bitcoin.

It's time to make Bitcoin great again.