The 98% crash of the trump memecoin was predictable. Here is what it reveals about crypto regulation.

When President Donald Trump launched the $TRUMP memecoin three days before his inauguration in January 2025, the crypto world split. One camp saw a political stunt. The other, a bet that presidential proximity would defy the usual memecoin gravity. Seven months later, Nansen’s blockchain analysis provides the verdict: 988,905 accounts lost money, collectively shedding $3.8 billion. That works out to roughly two-thirds of all buyers.

The numbers are stark. $TRUMP traded at $1.69 on Sunday, down nearly 98% from its all-time high of $75.35. Meanwhile, Trump’s personal financial disclosure revealed he made $636 million from the token, accounting for nearly half of the $1.4 billion the president earned from the crypto industry in 2024. The same White House that now promotes the U.S. as “the crypto capital of the world” sits at the center of one of the largest memecoin wealth transfers in history.

A predictable structure

Memecoins follow a well-documented lifecycle: hype launch, early insider accumulation, a retail FOMO surge, then a steep decline as early holders exit. $TRUMP adhered to this pattern almost too perfectly. The token launched at a time when its creator, the incoming president, had every incentive to maximize its value. Yet the underlying tokenomics contained no lock-up periods or vesting schedules for the issuer, a detail that on-chain analysts flagged within hours of the launch.

What made $TRUMP exceptional was not the mechanics of its crash but the scale. A token endorsed by the highest elected official in the United States reached a peak market cap in the billions within days, then shed roughly $76 billion in combined market value from its peak. For context, that is more than the entire market cap of several DeFi protocols combined.

Regulatory architecture in question

The SEC’s stated position, that memecoins are not securities, effectively removes the agency’s oversight authority over such tokens. This classification, issued under the current administration, means that the disclosure requirements and investor protections built into securities law do not apply to $TRUMP or any memecoin. The agency has also dropped several lawsuits against major crypto companies, signaling a broader pivot away from enforcement-driven regulation.

Critics argue this creates a dangerous safe harbor. “If a token is not a security, then no prospectus, no lock-up disclosure, no fiduciary duty attaches to the issuer,” said a legal analyst familiar with crypto securities law who spoke on condition of anonymity. “That absence is precisely what makes the current memecoin market such a high-risk environment for retail participants.”

Under the previous administration, the SEC had taken the opposite approach, pursuing enforcement actions against projects it deemed to have conducted unregistered securities offerings. The shift means that $TRUMP, and any future political memecoin, exists in a regulatory gray zone where the issuer can profit directly from the token’s appreciation while bearing no legal obligation to protect buyers from the token’s inevitable volatility.

World Liberty Financial and the broader portfolio

$TRUMP was not Trump’s only crypto venture. The president co-founded World Liberty Financial with his sons, a project that issued its own token, $WLFI. That token has also declined significantly, according to the Nansen data. The combined portfolio of Trump-linked crypto assets now represents a significant portion of both the president’s personal wealth and the assets held by a substantial number of American retail investors.

The financial disclosure covering Trump’s $1.4 billion in crypto-related earnings, with $636 million from $TRUMP alone, is unprecedented in scale for any U.S. political figure. Disclosure rules require reporting of broad ranges, not exact figures, but the sheer magnitude suggests that a single digital asset, launched from a sitting president’s social media account, generated more personal profit for the issuer than many large-cap crypto projects have created for their founders over years of operation.

The capital of what, exactly?

A White House spokesperson told The New York Times that “President Trump proudly made the United States the crypto capital of the world.” The phrase is carefully chosen. It does not claim victory for investor protection, price stability, or meaningful blockchain adoption. It claims victory for capital. The $TRUMP story illustrates that in the current regulatory framework, capital can flow in massive quantities without any built-in guardrails for the retail participants who arrive last.

The crypto industry’s long-standing rallying cry has been “code is law”, a principle that, in memecoin markets, translates into: the code determines who profits, and the law arrives too late to change the distribution. On current evidence, nearly one million people have learned that lesson to the tune of $3.8 billion.