Senators Demand SEC Probe Into Trump Memecoin After $3.8B Losses

Two U.S. senators have called on the Securities and Exchange Commission (SEC) to investigate President Donald Trump’s memecoin, $TRUMP, following reports that nearly one million investors lost $3.81 billion while Trump-affiliated entities earned $636 million. In a letter dated Aug. 4, Senators Elizabeth Warren (D-MA) and Richard Blumenthal (D-CT) asked SEC Chair Paul Atkins to probe whether the token facilitated fraud or unjust enrichment.

The token launched on Jan. 17, 2025, three days before Trump’s inauguration, and was promoted by the president on social media the next day. Blockchain analysis cited in the letter shows 988,905 buyers, about two-thirds of all purchasers, suffered combined losses of $3.81 billion through June. Meanwhile, roughly 500,000 earlier or more sophisticated traders reportedly secured about $4 billion in gains. The token has declined nearly 98% from its peak.

Warren and Blumenthal argued that Trump-affiliated entities collected trading fees regardless of price performance, separating their financial outcomes from those of retail investors. They also referenced a Senate Permanent Subcommittee on Investigations minority staff memorandum that collected investor accounts describing financial losses and feelings of abandonment. The memo linked these experiences to concentrated ownership, presidential promotion, and potential conflicts of interest.

The senators noted that Trump-affiliated entities reportedly control about 80% of the token supply through a three-year vesting structure, giving a limited group substantial influence over future circulation. They tied this concentration to ongoing congressional negotiations over cryptocurrency market structure and restrictions on officials profiting from digital assets.

The SEC has previously described typical memecoins as speculative assets driven by trading demand and online communities, often falling outside federal securities registration requirements. However, the agency has taken action against similar conduct, such as charging blockchain engineer Eric Zhu for an alleged liquidity-pool rug pull involving the Game Coin token, claiming he misappropriated approximately $553,000.

New York regulators have also warned that sentiment-based tokens expose consumers to manipulation and sudden losses, citing pump-and-dump activity, rug pulls, wash trading, and concentrated ownership as primary risks.

This is Warren’s first request for the SEC to investigate $TRUMP specifically for fraud or unjust enrichment, though she has previously raised ethics concerns over Trump’s crypto activities. The senators’ letter comes as Congress debates broader cryptocurrency legislation, and any SEC response could affect how regulators approach politically connected memecoins.

Source: https://news.bitcoin.com/featured/senators-demand-sec-probe-into-trump-memecoin-after-3-8b-losses/