New York (CNN) — Days before his inauguration in 2025, president-elect Donald Trump did something unusual: He launched a memecoin.
That memecoin briefly exploded in value – and then crashed in an epic selloff that left nearly a million investors facing losses.
Now, a pair of Senate Democrats are demanding Trump’s top Wall Street cop investigate the mess.
Democratic Sens. Elizabeth Warren and Richard Blumenthal are calling for the Securities and Exchange Commission to investigate Trump’s memecoin “to detect any illegal fraud or unjust enrichment that the coin may have facilitated.”
“We are concerned that President Trump’s memecoin scheme may constitute an illegal scam,” Warren and Blumenthal wrote on Monday to SEC Chair Paul Atkins in a letter shared first with CNN.
The Trump coin, 80% of which was held by Trump Organization affiliates, reached a peak of about $9 billion on January 19, 2025. Memecoins, a highly volatile type of cryptocurrency typically inspired by pop culture and viral trends, don’t hold intrinsic value but can drastically soar — or plummet — in price.
The $TRUMP cryptocurrency paid huge dividends to Trump, who promised to be America’s first crypto president and received enormous support from the industry. He made nearly $636 million in royalty and licensing fees related to “Celebration Coins” last year alone, according to his 2025 annual financial disclosure.
Flash forward to today: The Trump coin is worth less than $400 million and those who bought in at the top are staring at steep losses of approximately 97%, according to crypto analytics platform CoinMarketCap.
Almost 1 million people lost money on the Trump memecoin, racking up a total of $3.8 billion of losses through the end of June, according to research by crypto analytics firm Nansen cited by The New York Times.
“The SEC must be willing to enforce the law even when potential wrongdoers include those with powerful political connections,” the lawmakers wrote in the letter.
The White House referred questions to the Trump Organization. The SEC declined to comment.
The rug pull debate
Specifically, the Senate Democrats expressed concern that the memecoin effort could be a “rug pull.”
In the wild west of the crypto world, a rug pull is a con job where developers pump up the value of a token and then suddenly vanish with the investor funds. By pulling the rug out from investors’ feet, the tokens are worth little to nothing.
In a CNBC interview last month, Trump defended his crypto profits. He said he followed the law and authorized his sons to oversee his personal finances while he’s in office.
“I’m a really good business person. I’ve made money. I made a tremendous amount of money, more than I would have ever thought I would have made,” Trump told CNBC. “And I let people invest it, I don’t even speak to — I don’t even know who they are, but it’s given to big firms… my son Eric handles it.”
TRM Labs, a blockchain intelligence company, found in January 2025 that while hefty insider allocation in the Trump memecoin highlights the need for “meticulous oversight,” the project “does not have the hallmarks of a rug pull.”
Ari Redbord, a former federal prosecutor and US Treasury official who is now global head of policy at TRM Labs, told CNN that the January 2025 analysis still holds true that the Trump memecoin was not set up as a rug pull.
“That does not mean it is okay how it has played out,” he said.
Redbord pointed to how this token was concentrated in a small number of hands and price support eroded gradually, instead of all at once.
“A small group of early buyers and the coin’s creator profited. Most of the people who bought in later lost money, and lost it at scale,” he said. “Eighty percent of supply sitting with a small group of investors and close to a million retail buyers absorbing the losses, is going to look worse with time, not better, whether it was a rug pull or not.”
Warren and Blumenthal suggested in their letter that the Trump memecoin could be a “soft rug pull,” one where the support is pulled more gradually.
Are memecoins even securities?
There is debate over whether the SEC even has jurisdiction to investigate alleged rug pulls in the crypto world.
Days before Trump took office in 2025, the SEC charged a New York blockchain engineer with perpetrating a “rug pull fraud.” However, in late February 2025, weeks into the Trump administration, the SEC issued new guidance that clarified that a memecoin is not a security.
“Neither meme coin purchasers nor holders are protected by the federal securities laws,” the SEC said in that guidance.
But the SEC also said this guidance does not apply to products that are simply labeled memecoins “in an effort to evade the application of the federal securities laws by disguising a product that would otherwise constitute a security.”
In other words, regulators will evaluate each coin on a case–by–case basis.
Warren and Blumenthal argue Trump’s memecoin is one of those cases to evaluate.
“The SEC must investigate whether a fraudulent scheme may be underway, and prevent further extraction of enormous value from the hundreds of thousands of investors who put their faith in Trump’s coin,” the lawmakers wrote on Monday.
The-CNN-Wire
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