The inauguration of a multi-billion dollar grift

On Monday, Donald Trump took the oath of office — the first person to be sworn in as president while simultaneously hawking an eponymous meme coin.

Trump launched $TRUMP, a crypto token, on Friday night. Meme coins are crypto tokens tied to a celebrity or joke. The first and most famous is DOGE coin, a cryptocurrency centered around a famous image of a Shiba Inu dog. $TRUMP features an image of Trump during the assassination attempt last summer.

While meme coins are nominally tied to digital "artwork," they function primarily as a speculative asset. Since many meme coins attempt to capitalize on online trends, they are known for extreme volatility. Hailey Welch, an online personality known as the "Hawk Tuah girl," launched the "Hawk" meme coin in December. The Hawk coin's value exploded shortly after launch, reaching a market cap of $490 million. But the price quickly collapsed. Today, the total value of all the 999 million Hawk coins is less than $30,000. You can buy 338 Hawk coins for less than one cent.

Trump is leveraging the prestige of the presidency and the global coverage of the inauguration to boost the price of $TRUMP. By Sunday evening, the price of one $TRUMP coin soared to over $75, putting the value of the 200 million $TRUMP coins in circulation at nearly $15 billion. By Monday afternoon, $TRUMP had lost about 40% of its value.

The primary beneficiary of this speculative activity is Trump himself. In a move that raised red flags even among crypto enthusiasts, 80% of all $TRUMP coins are reserved for a company owned by Trump. At its peak, the value of these coins exceeded $50 billion, making $TRUMP, which did not exist a few days ago, the dominant source of Trump's wealth. The $TRUMP coins owned by Trump are currently locked, meaning they cannot be sold, but will be released in tranches over the next three years.

In 2016, Trump's net worth was estimated to be about $3 billion. Before the launch of the $TRUMP, that had increased to around $7 billion, largely due to the public listing of Truth Social's parent company, Trump Media & Technology Group. Truth Social loses millions of dollars every quarter and has few users, but Trump's fans keep its stock price elevated.

So Trump has a huge financial incentive to keep the price of $TRUMP elevated until he can sell his coins. For Trump, there is nothing but upside. He received the coins for free — whatever he can sell them for will be a windfall. Trump's supporters, however, could suffer huge financial losses. By Monday afternoon, a single $TRUMP coin cost $40. People who buy these coins looking to turn a big profit could instead find themselves with massive losses.

A vehicle for corrupt foreign influence

$TRUMP does not only create problems for reckless Trump fans. It means that the White House is for sale. Anyone seeking to curry favor with Trump — including foreign governments — now has a vehicle to transfer a virtually unlimited amount of money to Trump by driving up the price of $TRUMP coins.

As with all crypto transactions, anyone can purchase $TRUMP anonymously. The only record involves a digital wallet with no public owner. This means a foreign entity could make a large purchase of $TRUMP coins — perhaps boosting $TRUMP's value before Trump sold some of his holdings — and no one would know. It creates an unprecedented and completely opaque method to bribe the President of the United States.

"While it's tempting to dismiss this as just another Trump spectacle, the launch of the official Trump token opens up a Pandora's box of ethical and regulatory questions," Justin d'Anethan, an independent crypto analyst, told Reuters.

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Crypto companies under federal investigation boost $TRUMP

Thousands of meme coins are launched every month. The failure rate for meme coins is estimated at over 97%. With so much competition, it is hard to make a significant number of people become aware of a meme coin. Trump, as the President of the United States, solves that problem. But even once people discover a meme coin, it needs to be easy to buy and sell in order to sustain interest.

It is possible to buy and sell crypto assets without an intermediary. But most people buy and sell crypto through a handful of popular exchanges, which make the process easy and allow you to use cash and other assets to fund purchases.

Exchanges like Coinbase, Kraken, and Robinhood can greatly increase awareness and demand for a meme coin. At the same time, they are not going to list every new meme coin that is issued — especially since many of them are scams.

But Coinbase, Kraken, and Robinhood all have made $TRUMP available to their users, dramatically increasing the number of buyers, and sending its price higher. And they aren't just quietly listing $TRUMP. They are promoting $TRUMP to their user base.

Improving your relationship with the president is a good idea for any business. But these companies have even stronger motivations. Coinbase is currently being prosecuted by the SEC for "operating its crypto asset trading platform as an unregistered national securities exchange, broker, and clearing agency." The SEC is also prosecuting Kraken for similar alleged activities. Robinhood has not been charged but received a "Wells Notice" from the SEC last May, indicating enforcement action is coming.

The crypto industry is reportedly hoping that, under the Trump administration, the SEC will either end their prosecutions and investigations or offer a favorable settlements.

More broadly, these companies are counting on the Trump administration to allow them to operate legally. The $TRUMP coin allows Trump to make billions from a more permissive regulatory environment. It transforms the presidency from a public trust into a tool for personal enrichment.