Meme Coins have become a hot topic this bull market. Everyone from mainstream celebrities to retail investors has joined in to capitalize on the hype.
Dogecoin was once just a small subset in the crypto market. But it has grown into a billion-dollar industry that reached a peak of $137,6 billion by December 2024.
Meme Coins combine elements of popular culture and humour with social media trends to create hype driven cryptocurrencies.
Investors are attracted by promises of fast profits. This is often due to endorsements by high-profile individuals.
Many investors have lost money due to insider trading and hype driven movements.
The implosions of this year, from Hawk Tuah and Mother to Mother’s, show that while celebrity endorsements can drive hype, they do not guarantee legitimacy. 90% of these tokens fail in the end, leaving investors with losses.
From riches to rags
Hawk Tuah was the meme coin that everyone talked about this autumn. It is a result of Hailey Welch’s 2024 viral interview, where she said: “You’ve got to give them that ‘hawk tuah’ and spit it on that thing.”
In October, as the crypto-community embraced the meme coin craze, Welch’s comment became a viral hit.
Mark Cuban’s lighthearted support on her podcast and other endorsements helped make the idea a reality.
HAWK’s launch on December 4, however, was disastrous. Its value dropped 91% within three hours, as social media exploded with allegations of insider trading and sniping.
In just 20 minutes after the launch, the token market cap dropped from $500,000,000 to $60,000,000.
Andrew Tate is another infamous example of pump-and-dump. He’s a self-described misogynist and a masculinity influencer. Tate launched the Solana meme coin Daddy Tate.
The token was marketed as a sign of masculine empowerment, with the slogan: “Flip it for patriarchy.” However, after analysis by Bubblemaps on the blockchain revealed significant insider trading the token attracted criticism.
The insiders allegedly had purchased 30% of the stock early with holdings worth over $45million, raising questions about transparency and fairness.
The situation got even worse when the crypto community investigated and discovered that eleven Binance wallets had purchased 20% of Tate’s X supply just two days before Tate was promoted.
Tate did not himself sell the tokens. However, coordinated insider activities allowed these token holders to make massive gains, leaving clueless investors with worthless tokens.
The token of popular singer and dancer Jason Derulo was not exempt from controversy.
Jason (JASON), launched in June 2024 and quickly rising to great heights following Derulo’s promotion, saw its value plummet by 70% within a short time, making investors angry.
Derulo blamed crypto-influencer Sahil – Arora for a scheme to pump and dump cryptocurrency.
Bubblemaps, however, suggested that this was not the case. Bubblemaps revealed that wallets allegedly connected to Arora had controlled and sold nearly all of JASON after Derulo posted his promotional video.
However, the analytics platform also uncovered a wallet reportedly connected to Derulo himself, which offloaded $20,000 worth of tokens–contradicting his prior promise that he would “never sell.”
There are many more, including Davido, Iggy Azalea, and Caitlyn. But the majority of these tokens lose their original value after the hype has faded.
It extends to influencers of all kinds, including celebrities. Many of them are guilty of endorsing worthless tokens in order to gain money.
90 percent of celebrities-backed tokens will die within three months
In a November analysis by Coinwire, which analysed the meme coins promoted by 377 Influencers on X and found they had lost 90% or more of their value, 76% were considered dead.
The report claims that within three months 86% of tokens had dropped by 10 times. Only 3% of the meme coins promoted and sold by influencers actually delivered the promised gains.
It was found that some influencers promoted tokens with no real activity, in order to line their own pockets.
Influencers earn an average of $399 per promotional tweet. While many investors lose all their savings when trading volatile crypto currencies, they are able to make a profit by promoting them.
In most cases there is little that can be done for the small investor, because of the complex legal issues surrounding such promotions.
Legal repercussions
Manipulating the markets has always been and will continue to be illegal. Celebs and influencers who are found guilty can be charged with anything from securities violations to fraud.
In the world of unregulated meme coins and their constant evolution, it is not necessary to pass new legislation to make people accountable. They can use existing fraud laws.
For prosecutors to convict an individual involved in a Pump-and-Dump Scheme, they must prove that the celebrity deliberately devised and executed a scheme to deceive the investors. They also need to show the celebrity used tools such as the phone or internet to carry out the scheme.
The fraud, however, must have affected interstate or global trade. This is usually the case with cryptocurrency transactions.
While the meme coin craze may seem like an unrestrained free for all, there are real legal implications. Prosecutors can connect dots and bring charges if a token launches looks like it operates as a pump and dump.
The reason there aren’t many cases is because regulators concentrate their resources on high profile cases, where they could recover large sums of money in disgorgement. They don’t go after small influencers and vague promotional activities that cost too much to pursue.
The conclusion of the article is:
While meme coins may be an asset for some, the vast majority have had their hopes and dreams crushed. It doesn’t necessarily mean all of the cryptocurrencies that fall into this category are bad. Many have strong communities, and many are backed by solid causes.
Investors must still be very cautious, and conduct thorough research prior to investing their hard-earned cash in these high-risk assets.
The trend of meme coins is not likely to fade away any time soon. With platforms such as Pump.fun or Sun Pump that make launching one as simple as downloading an app to a smartphone.
Changpeng Zhao, Vitalik Anderin and other pundits recommend that instead of following the hype you focus on cryptocurrency which actually provides real value or can solve real problems.
It is better to focus on the utility of the tokens than on the image that someone thought was funny. This will ensure that the blockchain and crypto industry survives for the long term.
As new information becomes available, this post from HAWK TO JASON: How celeb-fueled coin memes turned nightmares into dreams may change.
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