U.S. Senators: "Official Trump (TRUMP) is a fraud"...Urge SEC Investigation

▲ Official Trump (TRUMP)

U.S. senators have labeled the Official Trump (TRUMP) memecoin an “illegal fraud” and demanded an investigation by the Securities and Exchange Commission (SEC), citing a 97% crash and $3.8 billion in investor losses.

According to the U.S. economic news outlet Benzinga on August 4 (local time), U.S. Senators Elizabeth Warren and Richard Blumenthal sent a letter to SEC Chairman Paul Atkins. The two senators argued that the possibility of TRUMP being used for illegal fraud or illicit gains should be investigated.

The two senators raised the possibility of a “soft rug pull,” where developers gradually withdraw price support without abandoning the project all at once, shifting losses to individual investors. TRUMP's market capitalization soared to approximately $9 billion on January 19, 2025, one day before Donald Trump's inauguration as U.S. President. At that time, 80% of the supply was held by Trump's corporate affiliates. Subsequently, the market capitalization dropped below $400 million, a 97% decrease from its peak.

According to Nansen data, approximately 1 million people suffered losses from TRUMP investments by the end of June, with cumulative losses reaching $3.8 billion. President Trump earned about $636 million last year in royalties and licensing fees related to Celebration Coins. The two senators stated, “The SEC must enforce the law, even if potential wrongdoers have strong political connections.”

Blockchain intelligence firm TRM Labs analyzed TRUMP in January 2025 and concluded that it did not exhibit the characteristics of a traditional rug pull. Ari Redbord, a former federal prosecutor and TRM Labs' global policy head, stated that this assessment remains valid. However, he added, “A structure where a small number of investors hold 80% of the supply and approximately 1 million individual investors bear the losses will look worse over time.”

In February 2025, the SEC issued guidance stating that memecoins are not securities and their holders are not protected by federal securities laws. However, it clarified that this guidance does not apply to products merely labeled as memecoins to evade securities laws, and individual cases will be judged separately. The SEC did not respond to the senators' letter, and the White House forwarded related questions to the Trump Organization.

[Key Article Summary]

-Senators Elizabeth Warren and Richard Blumenthal demanded that the SEC investigate the possibility of TRUMP being used for illegal fraud or illicit gains.

-TRUMP's market capitalization decreased from approximately $9 billion to below $400 million, and cumulative losses for about 1 million people totaled $3.8 billion.

-TRM Labs assessed that it was not a traditional rug pull but pointed out the concentration of supply and the loss structure for individual investors as issues.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*