Sometimes, usually as a result of stupidity, hubris or a combination of the two, those involved in what looks a lot like criminal behaviour do so without shame, in full public view. One short but lucrative con that’s become common in recent years is the ‘crypto rug pull,’ with the schemes often tied to so-called influencers or minor celebrities.
In crypto currency terms, a rug pull occurs when a ‘meme’ or ‘shit’ coin is created and a small number of people or entities pre-purchase or, in many cases are given, a large share in the venture before it’s made available to the public. If their marketing works, investors pour in when the token is launched and buy, causing the price to spike. At this point the early stakeholders sell, tanking the coin and leaving their marks with now worthless tokens.
When stripped of the obfuscating terminology associated with all things crypto, most of these schemes are just old school pump and dumps, usually aided by technology to buy and sell the coins faster than anyone else, called sniping.
Admittedly, it’s hard to feel sympathy for those who lose money by investing in a crypto scheme promoted by an Andrew Tate or Hawk Tuah Girl; even authorities seem to have trouble with this, as shown by the minuscule number of prosecutions for what often look like pretty obvious frauds.
The $LIBRA rug pull
Whether he had full knowledge of it or not, something of a trailblazer in bringing what looks a lot like a rug pull into politics is Trump ally Javier Milei, the libertarian leader of Argentina. He promoted a coin called $LIBRA in February on his X account, helpfully including a link so his followers could buy into it. After this post, the token’s value soared.
Promoting a coin claiming to be dedicated to improving the prospects of small business and working people in his country must have seemed like a good idea at the time, especially as the bottom half of Argentina’s people spiral further into grinding poverty under his rule. More importantly, Milei’s endorsement may have given some investors the idea that $LIBRA had the support of his government.
Unfortunately, and, honestly, also somewhat suspiciously, President Milei removed the tweet soon after the value of $LIBRA crashed, an event that cost those who believed in the project tens of millions of dollars.
Hayden Davis, who claims he’s responsible for launching the token and who profited massively from it, along with the Jupiter Exchange that facilitated trading in it, have both claimed that President Milei was involved with the project from the beginning.
While there were opposition calls in Argentina for their president’s impeachment and some in the legal community there demanded a criminal prosecution for fraud, not much has come of the scandal yet. A few weeks later, a jovial Milei was at CPAC in Maryland, gifting Elon Musk a chainsaw with which to metaphorically eviscerate the U.S government, a process that’s clearly further along at home.
$TRUMP, $MELANIA and World Liberty Financial
While the Biden Justice Department seemed to be attempting to regulate the crypto space, especially the big players targeting regular people rather than the obsessively online, the Trump Administration is headed in the opposite direction.
Before he took office, the current President and First Lady created well publicized meme coins that soared in value as his inauguration approached. In the case of the $MELANIA token, just twenty four wallets managed to net almost $100 million dollars over a few days, with the coin peaking at almost $14. It’s now worth around 30 cents.
Despite this, as hard as it is to give a person so unworthy of it any credit, Donald Trump or those advising him seem to have seen beyond short term but still lucrative rug pulls to what looks like a longer con. After all, when you’re the chief executive of the most powerful country in the world, there are many individuals and entities willing to pay dearly for access.
One aspect of this story that’s still missing in a lot of mainstream reporting is that an entity tied to the Trump organization takes a fee on every transaction involving his $TRUMP token, making money on the early rush to buy them prior to January 20th and again in the lead up to what amounted to a month long auction that also drove up the coin’s value.
Rather than trying to keep up the appearance that nothing untoward was going on, the President of the United States promised that the 220 largest stakeholders in $TRUMP would be invited to a private dinner at one of his golf clubs in Washington, DC. When the day arrived, the top 25 also reportedly had a private meeting with him and the top 4 got $100,000 Tourbillon Trump watches.
According to Trump’s Press Secretary, despite him delivering his remarks from a podium emblazoned with the presidential seal, the festivities were not a problem because they were “private” and took place on President Trump’s “personal time.”
As Senator Chris Murphy of Connecticut put it to Reuters prior, "The Trump meme coin is the single most corrupt act ever committed by a president. Donald Trump is essentially posting his Venmo for any billionaire CEO or foreign oligarch to cash in some favors by secretly sending him millions of dollars.”
So, who is the person who currently holds the most $TRUMP? Based on the wallet’s history and the name attached to it online, it’s a Hong Kong based man named Justin Sun, who runs a crypto company called Tron. Interestingly, a case against the company was paused by the Justice Department soon after an earlier investment in $TRUMP and two other tokens launched in cooperation with the Trump family: $WLFI and USD1.
The president and close family members, including his sons Eric and Don Jr., who have a controlling stake in a decentralized finance or DEFI company called World Liberty Financial but no official management role, clearly have larger ambitions than meme coins and the NFT trading cards they’ve shilled in the past and the latter tokens prove it.
USD1 is what’s called a stable coin, a token that’s either backed by real world assets like the US dollar, or an algorithm that’s supposed to make it less risky by pegging it to a currency. Regardless of the name, it should be noted that a number of stable coins have failed in the past.
In the case of USD1 this seems unlikely at present considering the big pocketed investors from tech bros like Justin Sun to Gulf monarchies that have thrown vast amounts of money at it.
As reported by the New Yorker in May, an Abu Dhabi based investment firm is putting $2 billion dollars of USD1 as an investment into Binance, the world’s biggest crypto exchange, lending more legitimacy to both.
Less easily explained is $WLFI, which is what’s called a governance token tied to World Liberty Financial’s operations. Holders of these tokens technically get voting rights in terms of the direction that the platform is taking, akin to having voting shares in a publicly traded company.
This concept seems pretty democratic, which was a major selling point for the crypto space a decade ago, even if, just like the stock market, it’s always been skewed in favor of insiders. Regardless, in the case of $WLFI, the Trumps hold 80% of the tokens, making others’ votes or proposals moot.
Beyond feathering his family’s nest with a windfall that’s more than doubled his fortune in a few month’s time, the former Apprentice host, who played a successful business man on TV if not in life, has done a lot to re-center crypto as a valid get rich quick scheme during increasingly precarious times for working people.
Crypto-evangelists will always explain the block chain to you in mystifying ways but it’s little more than a highly encrypted Excel file. Besides being an ongoing environmental disaster, cryptocurrencies, even so called stable coins, aren't revolutionary to anyone familiar with scam artists of the past from Ponzi to Madoff.
As a certain U.S. president once said, "I am not a fan of Bitcoin and other cryptocurrencies, which are not money and whose value is highly volatile and based on thin air."
