Crypto▼ Bearish
Senators seek SEC probe of Trump memecoin after $3.81B crash
Democratic senators say Trump's memecoin may be an illegal rug pull, costing over a million investors $3.81B. The probe demand could stall the CLARITY Act.
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Senators Elizabeth Warren and Richard Blumenthal have asked the U.S. Securities and Exchange Commission to investigate the Official Trump [TRUMP] memecoin, calling it a potential illegal scam. In an Aug. 3 letter to the SEC, the two Democrats said President Donald Trump made $636 million in profits from the coin alongside early buyers. More than a million investors lost over $3.81 billion after the token crashed 98%, the lawmakers wrote. That pattern mirrors a rug pull, they said.
We are concerned that President Trump's memecoin scheme may constitute an illegal scam, such as a 'rug pull.' – the letter states
Once launched, the coin became "an abandoned project," the letter added. Late buyers are always left "catching knives and hefty losses," the senators said. A rug pull, in crypto markets, happens when insiders dump a token after its launch, leaving retail investors holding near-worthless coins.
The letter arrives as the Senate debates the CLARITY Act, a crypto market structure bill. Democrats have tied ethics provisions – including rules targeting presidential conflicts of interest – to their support for the legislation. Some Republicans have also withheld their backing. The bill may need more than 10 Democratic votes to reach the 60-vote threshold, several analysts said.