The memecoins launched by President Donald Trump and his wife days before his inauguration could damage the industry’s reputation and risk a backlash from investors, crypto executives have warned.

$ TRUMP launched by the president on Friday night in the US and followed on Sunday by $MELANIA. The total nominal value of the two tokens initially surged over the weekend, with the president reaching $14.5bn and Melania hitting nearly $3bn.

But they have since lost more than half their value, leading to accusations of conflicts of interest and concerns that thousands of retail investors are being sucked into trading tokens that are more volatile than bitcoin.

“Call me old-fashioned but I think presidents should focus on running the country,” said Nic Carter, the founding partner of crypto venture capital firm Castle Island Ventures and a Trump supporter.

“Not to mention the obvious (conflict of interest) given the fact that Trump can make crypto policy,” he added.

A big Silicon Valley investor at the World Economic Forum in Davos called Tesla boss Elon Musk and Trump “the new Crassus and Caesar” – referring to Roman political figures who formed an alliance to pursue their own interest.

“We’re seeing real ‘End of Empire’ stuff in the US,” the man added, pointing to the creation of billions of dollars in wealth overnight. “Human nature never changes.”

Much of the trading activity in the 200mn Trump coins available is not centered in the US but on little-known Asia-based exchanges such as BiKing, Gate.io and Megabit, according to data from CoinMarketCap.

Memecoins have no cash flow, business model or practical use to back up their valuations. Their value derives from their popularity, which is often as fleeting as the memes they represent.

“Trump Memes are intended to act as an expression of support for, and engagement with, the values ​​and beliefs embodied in the ‘$TRUMP’ symbol,” the coin’s website said.

Trumps coin launch comes after the president lent his enthusiastic support for crypto during his election campaign. He promised a more industry-friendly regime for companies, after executives faced an explosion of regulation under the Biden administration.

But many of the crypto industry worries that the launches threaten further damage to the reputation of a sector that is trying to rebuild confidence after a series of high-profile frauds and collapses.

Some lawmakers, on the other hand, are concerned that retail traders may lose large sums of money.

“This memecoin represents crypto at its worst,” said Maxine Waters, Democrat congresswoman and member of the US House Financial Services Committee. “Trump has created a way to circumvent national security and anti-corruption laws, allowing interested parties to anonymously transfer money to him and his inner circle.”

“His interest in the economy is for sale,” said Oskar Åslund, chief strategy officer at AKJ, a crypto hedge fund brokerage. “There are no checks and balances here.”

Gettrumpmemes.com did not respond to a request for comment.

“I believe it will hurt the industry,” Anthony Scaramucci, founder of SkyBridge Capital and former White House communications director, said on a panel in Davos on Tuesday. “I think it will slow some people down in the regulatory process,” added Scaramucci, whose firm runs a digital assets fund.

The most popular memecoins in the world are tokens that refer to viral moments and characters on the internet — such as Dogecoin, which represents the Shibu Inu dog; Pepe, representing a comic green frog; and Fartcoin.

About 80 percent of Trump’s tokens are held by CIC Digital, a company affiliated with the Trump Organization, and a CIC-owned business called Fight Fight Fight LLC, according to the token’s website – a reference to the trial to assassinate Trump last summer. . The companies will also receive a share of trading revenues related to the Trump token.

Tokens held by insiders will begin to be unlocked for trading in the next three to 12 months.

Following Trump’s lead, Lorenzo Sewell, a Detroit pastor who spoke during the president’s inauguration, announced the launch of his own memecoin later that day.

“I need you to do me a favor and go and get that coin so that we can fulfill the vision that God has called us to do on this earth,” he said in a video online.

While Trump’s promises of crypto-friendly regulations have been welcomed by the industry, executives are skeptical that the president’s enthusiasm for memecoins will benefit them in the long run.

“The immediate effect is to drain liquidity and attention from legitimate projects that work on real use cases that the industry needs to prove to the world by 2025,” said Serge-Raymond Nzabandora, corporate development and finance manager at Yield Guild Games, a blockchain company.

“(Memecoins) will end up costing retail investors because of its zero sum nature. Unfortunately, it’s funny because this is what (former Securities and Exchange Commission chair) Gary Gensler avoided,” he added.

Trump promised to “end the persecution” of the crypto industry and nominated crypto advocate Paul Atkins to lead the regulator, leading many to think that an investigation into Trump’s own coins is unlikely.

In an apparent attempt to prevent potential lawsuits, the terms listed on the Trump memecoin website state that users “agree not to bring, join or participate in any class action lawsuit in any claim, dispute or controversy you may have”.

Haliey Welch, who created a memecoin called “Hawk Tuah” based on a viral internet moment, was sued late last year after investors lost money on his token. Last month, he said the case was ongoing and he was “fully cooperating” with attorneys.

“There is no protection for retail investors in this,” added Åslund. “He’s kind of above the law which is obviously also a scary thing.”