Emre Yumlu 
Memecoins are turning into investor traps with trading and rug pull incidents, raising regulatory concerns.
Memecoins: Transformation from Community-Driven Digital Assets to Investor Traps
Initially viewed as community-driven digital assets, memecoins are increasingly becoming traps targeting retail investors. A rising number of scams and failed celebrity-backed tokens are raising regulatory concerns.
The $4 billion collapse of the Libra (LIBRA) token, supported by Argentine President Javier Milei, delivered a major blow to the sector, after eight insider wallets cashed out $107 million in liquidity, causing a 94% price drop within hours of launch.
The growing number of memecoin-related scams presents significant regulatory challenges. Anastasija Plotnikova, co-founder and CEO of blockchain regulatory firm Fideum, stated:
“Memecoins have evolved from community-driven social experiments to a chaotic space focused on value extraction from retail investors. Insider trading rings, pump-and-dump schemes, and sniper groups have replaced the organic, collectible nature of original memecoins, creating an unhealthy playing field.”
Scandals and Crypto Regulations
Investors must distinguish between memecoins that are genuine “collectibles” and “outright fraudulent activities” like rug pulls, which are “unethical and clearly illegal,” Plotnikova emphasized, adding, “These activities should be under the jurisdiction of law enforcement agencies.”
After the collapse of Libra, new revelations emerged, notably that Libra was an “open secret” in memecoin insider circles, and some members of the Jupiter decentralized exchange knew about the token launch two weeks in advance.
Memecoin Scandals Unlikely to Affect US Crypto Legislation
Despite the recent memecoin meltdowns negatively affecting investor sentiment, they are unlikely to impact long-term cryptocurrency regulations. Dmitrij Radin, founder of Zekret and CTO of Fideum, explained that crypto legislation is shaped with a “long-term perspective,” not based on recent events.
He also pointed out that the Libra rug pull is different from the launches of the Trump (TRUMP) and Melania Meme (MELANIA) tokens. These two tokens are unlikely to trigger regulatory responses in the US, Radin said, adding:
“US crypto czar David Sacks mentioned that memecoins are more of a collectible. So, they shouldn’t be regulated as securities or anything like that.”
“That’s why I believe Trump and Melania coins will be treated differently from Libra,” he concluded.
Also, in the comment section, you can freely share your comments and opinions about the topic. Additionally, don’t forget to follow us on Telegram, YouTube and Twitter for the latest news and updates.