Trump’s Memecoin May Be An ‘Illegal Scam,’ Sen. Warren Warns. She Wants The SEC To Investigate
Democratic Sens. Elizabeth Warren and Richard Blumenthal are demanding a federal investigation into President Donald Trump’s memecoin, warning that the cryptocurrency may have been used to enrich insiders while hundreds of thousands of buyers suffered steep losses.
In a letter sent to Securities and Exchange Commission Chair Paul Atkins, the senators called on the agency to examine Trump’s namesake token for evidence of fraud, market manipulation or unjust enrichment.
“We are concerned that President Trump’s memecoin scheme may constitute an illegal scam,” Warren and Blumenthal wrote in the letter, reported CNN.
Trump launched the $TRUMP token shortly before returning to the White House in January 2025. The cryptocurrency briefly reached a market value of roughly $9 billion before falling sharply from its peak.
The coin was trading at around $1.48 Tuesday, with a market capitalization of approximately $368 million, according to CoinMarketCap. That marked a decline of about 98% from its all-time high above $73.
Nearly 1 million traders lost a combined $3.8 billion on the token through the end of June, according to research by blockchain analytics company Nansen cited by The New York Times. Entities associated with the Trump Organization initially controlled 80% of the token’s total supply.
At the same time, Trump has reported substantial income from cryptocurrency ventures connected to his name and family businesses. His 2025 financial disclosure listed more than $635 million in income tied to CIC Digital and the Trump memecoin business, according to The Associated Press.
“The SEC must be willing to enforce the law even when potential wrongdoers include those with powerful political connections,” Warren and Blumenthal wrote.
The lawmakers asked the regulator to determine whether the token amounted to what crypto traders call a “rug pull,” a scheme in which a project’s creators promote a token, attract buyers and then withdraw support or liquidity after its price rises.
They also raised the possibility of a “soft rug pull,” where insiders extract value over a longer period rather than abandoning the project through one sudden sale.
Blockchain intelligence company TRM Labs said shortly after the token’s launch that $TRUMP did not display the typical characteristics of a rug pull or pump-and-dump operation. The project had a structured release plan, while tokens held by insiders were subject to lockups intended to prevent immediate large-scale selling.
TRM Labs nevertheless warned that the token’s heavy concentration among insiders required close oversight. The company said $TRUMP’s ownership structure and political prominence created risks even without evidence of a conventional rug pull.
Ari Redbord, TRM Labs’ global head of policy and a former federal prosecutor, told CNN that the company’s original assessment still stands. However, he said the token’s concentration among early buyers and creators meant that a small group profited while later retail buyers absorbed losses on a massive scale.
Trump defended his cryptocurrency earnings in a CNBC interview last month, saying he had complied with the law and left the management of his finances to his sons and outside firms.
“I’m a really good business person,” Trump said, adding that his son Eric Trump handles the investments.
The demand places Atkins in a difficult position because the SEC has already said that typical memecoins do not qualify as securities.
In February 2025, the agency’s Division of Corporation Finance said most memecoins function more like collectibles than investments in a business. They generally offer no rights to income, profits or company assets and therefore fall outside federal securities laws, according to the SEC’s staff statement.
The agency also warned, however, that promoters cannot avoid securities regulation simply by labeling an investment product a memecoin. Each product must be evaluated based on its specific structure and how it is marketed.
Warren and Blumenthal argue that distinction gives the SEC grounds to examine $TRUMP rather than automatically treating it as an ordinary speculative token.
“The SEC must investigate whether a fraudulent scheme may be underway,” they wrote, “and prevent further extraction of enormous value from the hundreds of thousands of investors who put their faith in Trump’s coin.”
