Two US senators have asked the Securities and Exchange Commission (SEC) to investigate President Donald Trump’s $TRUMP memecoin after reports that nearly one million investors lost more than $3.81bn, while Trump-affiliated entities received about $636m.
Elizabeth Warren, a Democrat representing Massachusetts, and Richard Blumenthal, a Democrat representing Connecticut, submitted their request to the SEC on 4 August. They argued that the token may have enabled fraud or unjust enrichment, as Congress continues to debate wider cryptocurrency legislation.
According to the senators’ letter, investors lost more than $3.81bn between the token’s launch and June. At the same time, entities linked to Trump received $636m, while a number of early traders reportedly made substantial profits before the value of $TRUMP fell by almost 98% from its peak.
The token was launched on 17 January 2025, three days before Trump’s inauguration. The president promoted it on X the following day.
Warren and Blumenthal said Trump-affiliated entities collected trading fees regardless of whether the token’s price rose or fell. In their view, that created a financial separation between those entities and ordinary investors who bore the losses when $TRUMP declined.
Blockchain analysis indicated that 988,905 buyers – approximately two-thirds of all purchasers – held combined losses of $3.81bn through June. By contrast, about 500,000 earlier or more sophisticated traders reportedly made approximately $4bn.
A minority staff memorandum from the Senate Permanent Subcommittee on Investigations included accounts from investors who described significant financial losses and said they felt abandoned after the token’s collapse. The document linked those experiences to concentrated ownership, presidential promotion and possible conflicts of interest.
Warren has previously examined Trump’s involvement in cryptocurrency. Her earlier concerns included ethical questions surrounding a dinner for leading $TRUMP holders, as well as possible conflicts involving the administration’s cryptocurrency policies.
The 4 August letter is her first request for the SEC to examine whether the $TRUMP memecoin itself facilitated fraud or unjust enrichment in connection with the reported losses.
Promotion of Trump-branded products has continued despite the fall in the token’s value. A White House video advertised a separate physical commemorative coin while hundreds of thousands of $TRUMP wallets remained below the price at which their holders had bought.
The SEC’s Division of Corporation Finance has described typical memecoins as speculative crypto assets whose value is generally driven by trading demand, online communities and cultural interest. Such offerings often fall outside federal securities registration requirements, although the regulator says individual transactions must be assessed on their own circumstances.
Federal regulators have already taken action over conduct resembling some of the risks outlined by the senators. The SEC charged blockchain engineer Eric Zhu over an alleged liquidity-pool rug pull involving the Game Coin token. The regulator claimed Zhu misappropriated about $553,000.
New York regulators have separately warned that sentiment-based tokens can leave consumers vulnerable to manipulation and sudden losses. The risks they identified included pump-and-dump schemes, rug pulls, wash trading, concentrated ownership and fraudulent trading platforms.
A consumer guide says memecoins often derive their value from online attention, celebrity endorsements and speculation rather than an underlying practical use. Their concentrated supply, extreme volatility and rapidly shifting public sentiment can expose buyers to severe losses.
On-chain analysts said 10.84 million $TRUMP tokens were transferred towards Bitgo on 25 July, in a movement valued at about $16.9m. Three reported transfers over a five-month period had a combined value of approximately $172.4m.
Entities affiliated with Trump reportedly control about 80% of the token’s supply under a three-year vesting arrangement. That gives a relatively small group considerable influence over how much of the token enters circulation in the future.
Warren and Blumenthal linked that concentration of ownership to congressional negotiations over cryptocurrency market structure and possible restrictions on public officials profiting from digital assets.
The senators have asked SEC Chair Paul Atkins to establish whether $TRUMP facilitated fraud or unjust enrichment. Any response could help shape the way regulators assess politically connected memecoins as Congress considers broader rules for the cryptocurrency market.
