Author: Zoltan Vardai, CoinTelegraph; Compiler: Baishui, Golden Finance
Meme coins were once seen as community-driven digital assets, but are increasingly being used to exploit retail investors, with a growing number of scams and celebrity-backed token failures raising regulatory concerns.
The collapse of the Libra (LIBRA) token, with a market value of $4 billion, is the latest blow to the industry after eight internal wallets cashed out $107 million in liquidity, causing its price to fall 94% within hours of its launch.
The rise of scams related to memecoins poses a major regulatory challenge, said Anastasija Plotnikova, co-founder and CEO of blockchain regulation firm Fideum.
Plotnikova pointed out: “Memecoins have evolved from a community-driven social experiment to a chaotic situation dominated by retail investors extracting value”, adding:
“Inner circles, pump and dump, and sniper groups have replaced the original memecoin Investors also need to distinguish between memecoins that can be considered true “collectibles” and “outright fraudulent activity” such as rug pulls, which are “not only unethical, but clearly illegal, with case law supporting enforcement.” “In my opinion, these activities should fall squarely within the jurisdiction of law enforcement,” she added. Since the collapse of the Milei-backed Libra token, more disturbing revelations have emerged, notably that Libra was an “open secret” within memecoin inner circles and that some members of the Jupiter decentralized exchange knew about the token’s launch two weeks in advance. Memecoin scandal unlikely to impact U.S. cryptocurrency legislation While recent memecoin crashes have had a negative impact on investor sentiment, they likely won’t have an impact on emerging cryptocurrency regulation in the long run, according to Dmitrij Radin, founder of Zekret and CTO of Fideum.
He noted that this is because cryptocurrency legislation is developed from a “long-term” perspective and not just based on recent events.
It’s also important to understand that the appeal of Libra is different from launching official Trump (TRUMP) and official Melania Meme coins (MELANIA), which are unlikely to spark a regulatory response in the United States, Radin said, adding:
“US crypto czar David Sacks mentioned that Meme coins are more like collectibles. Therefore, it shouldn’t be regulated as a security or anything like that. ”
“That’s why I believe the Trump and Melania coins will likely be accepted in a different way than Libra,” he added.
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