When "Meme Coins" Became Wealth Extraction Machines: The Political Phenomenon That Surprised the Crypto Market

In January 2025, during the presidential inauguration celebrations in Washington, something unprecedented in cryptocurrency history happened: a political couple simultaneously launched two digital tokens that reached trillion-dollar market caps within hours, only to collapse days later. The affected: hundreds of thousands of ordinary investors. The winners: a closed circle of crypto operators.

The weekend that changed the game

In mid-January, as inauguration events were underway, the Trump family announced the launch of TRUMP—a meme coin with no backing or functionality. A few hours later, Melania Trump introduced her own token, MELANIA. The phenomenon caused mass surprise in the market: both tokens skyrocketed from virtually zero to all-time highs within minutes.

The numbers were astonishing. At their peak, the family and their close associates accumulated gains of over $5 billion. But the reversal was equally brutal: within 72 hours, both tokens lost more than 90% of their value. Blockchain analysis revealed that internal operators extracted approximately $350 million before the collapse.

“Apparently, everything was legal,” assured the White House spokesperson in subsequent statements. However, the crypto market was vibrating with outrage. Experienced traders spoke of “pump and dump”—a classic market manipulation tactic that, in traditional finance, would land you in prison. Here, it simply happened under the regulatory radar.

The anatomy of a perfect scam: Meme coins without regulation

To understand how this was possible, we must trace back to the origins of meme coins. These tokens emerged as a joke in 2013 when two programmers chose a viral image of a Shiba Inu to create Dogecoin, satirizing the uncontrolled proliferation of cryptocurrencies. What started as irony became an empire.

Unlike any traditional financial asset, meme coins lack fundamentals entirely. They have no backing company, no cash flow, no utility. Their value depends solely on “hype”—pure speculation about speculation. That is: buying low in hopes that someone else will buy higher. When everyone tries to sell simultaneously, the castle collapses.

“According to the efficient markets theory, this shouldn’t work. But the reality is that it makes money,” explained Alon Cohen, co-founder of Pump.fun, the most popular platform for creating and trading meme coins. Pump.fun has facilitated the launch of over 1,400 meme coins, generating nearly $1 trillion in fees since January 2024.

The platform operates with alarming simplicity: creating a token takes just a few clicks. No programming requirements, no regulation, no verifications. Anyone can launch a coin on any topic. The only requirement is generating enough “noise” on social media and specialized forums.

Shadow operators: from Argentina to the global market

The first sign of a coordinated scheme came from Argentina. In February 2025, Argentine President Javier Milei publicly endorsed a meme coin called LIBRA. Hours after his support, the token collapsed. Milei quickly deleted his supportive messages, claiming ignorance.

But blockchain doesn’t forget. Nicolas Vaiman, a blockchain tracking analyst, uncovered revealing anomalies. He found that someone bought $1.1 million worth of LIBRA seconds after the presidential announcement—privileged information in action—sold three days later, pocketing $100 million in profits.

The investigation led to Hayden Davis, a crypto advisor with connections to multiple presidential projects. Davis, a former student at an evangelical university, had become a shadow operator in the meme coin market. He worked with his father and had established Kelsier Ventures, a company advising token issuers, connecting with influencers, and executing operations.

What was most surprising was the pattern detected: all tokens Davis operated followed the same sequence: silent internal sell → price spike via coordinated “hype” → abrupt collapse. Winners: Davis and his circle. Losers: conventional investors caught off guard by the volatility.

When the Argentine scandal broke, Davis surprised many by publicly admitting his involvement in LIBRA. He claimed to have made $100 million selling the token, though he insisted he was only a “fund custodian.” His subsequent videos revealed a harsher reality: he admitted to participating in the launch of MELANIA as well, though denying personal gains.

The exchange: how crypto exchanges facilitated the operation

The crucial element enabling these operations was the software of decentralized exchanges. Specifically, Meteora platform played a central role. This exchange was founded by Ming Yeow Ng, a crypto operator from Singapore known by the alias “Meow,” who cultivates an image of an anonymous visionary.

Ng grew up in Singapore, studied computer engineering, and in 2021 launched a crypto finance app that was eventually acquired by high-profile investors. When the firm’s leader faced massive fraud allegations, Ng rebranded his project to Meteora and continued expanding his platform.

Revenue analysis shows that 90% of the $134 million Meteora generated in a year came specifically from trading fees on meme coins—much more than any other product. This meant that the journey of meme coins was the journey of Meteora.

Moty Povolotski, a former associate of Davis turned whistleblower, revealed crucial details. He explained that someone from the Trump team contacted Meteora requesting “technical support” for the launch of TRUMP and MELANIA. Soon after, Davis sent messages boasting of “unprecedented power” and mentioning secret plans for MELANIA.

The discovery: connections between presidential operations

The most surprising revelation from blockchain analysis was that the wallet that created LIBRA in Argentina was connected to the one that created MELANIA. This suggested that these were not independent operations but a coordinated team with experience replicating the same model in different political contexts.

When Povolotski confronted Ben Chow, then CEO of Meteora, he admitted to introducing Davis to the “Melania team” for “support” reasons. Shortly after this revelation, Chow resigned.

Ng, for his part, adopted a stance of “technical ignorance.” In a Singapore meeting, he insisted that Meteora only provided technological infrastructure, without participating in operational decisions regarding the tokens. “I don’t control how people use my tools,” he argued. He compared the situation to a “baby in the bathtub”—the idea that an entire industry shouldn’t be discarded because of malicious uses.

However, the numbers tell a different story: the weekend of the TRUMP launch was the second-highest transaction volume in Meteora’s history. Hard to believe such volume went unnoticed by platform management.

The ghost disappears: Hayden Davis and the consequences

After the massive scandal and public accusations, Davis vanished. His social media went silent, his numbers stopped responding. Yet, blockchain analyses show he continues to operate tokens from anonymous addresses.

In an interview with YouTubers specializing in scams, Davis finally admitted the full scope of the problem: “Meme coins are a regulation-free casino. The entire crypto sector isn’t much better. It’s all shit.”

He explained the “sniping” tactic: traders with privileged information buy massively at a token’s launch and sell when smaller investors join, capturing huge profits within minutes. According to his own account, this was the systematically applied model.

The phantom regulation: why “everything is legal”

The obvious question is: how is it possible that operations that would result in insider trading and fraud charges on Wall Street are completely legal in crypto?

The answer lies in the radical absence of regulation. When the U.S. SEC finally issued a stance on meme coins, it simply warned that “other anti-fraud laws may apply”—as if that was enough. No regulator has launched serious investigations. No prosecutor has filed charges.

Max Burwick, a lawyer representing harmed investors, described the phenomenon as “the ultimate value extraction machine designed by very capable people.” He has sued Pump.fun, calling it “a manipulated casino by insiders,” and has filed separate charges against Davis, Chow, and their associates for repeated “pump and dump.” Cases remain unresolved.

All the accused deny irregularities. Davis’s lawyers argue that LIBRA “is not a scam” because it was never explicitly promised that the price would rise. Chow’s lawyer insists that his client “only developed software” and that any illegality would be the responsibility of others.

Meanwhile, the Trump family diversified their “conflict of interest portfolio”: the president pushed for the U.S. government to buy strategic Bitcoin reserves; his son Eric controls a Bitcoin mining company; the sale of fighter jets to Saudi Arabia was accelerated while the family licensed the Trump brand to a skyscraper in Jeddah.

The epilogue: when the fever fades

As of December 10, 2025, TRUMP had fallen 92% from its peak, trading at $5.9. MELANIA had plummeted 99%, practically worthless, at $0.11.

Trading volume data shows that in November, the meme coin market experienced a 92% drop from its January peak. Investors had been “hunted” repeatedly until exhausting their resources. The speculative fever that had surprised the market in January evaporated just as quickly as it had risen.

In June, “Fight Fight Fight LLC”—the entity registered behind the tokens—announced a new trading app. The president’s children, however, publicly condemned the project for “lack of family approval.” The family is planning its own crypto platform.

Ng and Meteora continued smoothly. In October, the exchange launched its own cryptocurrency with an initial capitalization of over $300 million. As long as operators remain silent about how they extracted hundreds of millions of dollars in hours, it will be difficult to know if they will ever face consequences.

Final reflection: the microcosm reflecting reality

“Crypto is a microcosm, isn’t it? It reflects what the world truly wants,” Ng said while eating noodles in Singapore. “The world wants to make quick money, effortlessly.”

Perhaps he was right. What happened with the presidential tokens was not an anomaly but the clearest expression of the meme coin model: an industry where the lack of regulation allows sophisticated operators to extract value from less-informed investors, again and again, with legal impunity.

The difference is that this time, the operators were the most surprising imaginable: a political family with direct access to the highest spheres of power, using the tools of an unregulated industry to capture gains from their own followers.

When the fever finally ends, the uncomfortable question remains: when exactly does speculation turn into corruption? And in an industry where regulators simply do not intervene, what’s the difference?