From social experiment to retail ‘value extraction’ tools

Memecoins, once seen as community-driven digital assets, are increasingly being used to exploit retail investors, with a growing number of scams and failed celebrity-backed tokens raising regulatory concerns.
The $4 billion collapse of the Libra (LIBRA) token, which was endorsed by Argentine President Javier Milei, is the latest blow to the sector after eight insider wallets cashed out $107 million in liquidity, leading to a price decline of 94% within hours of its launch.
The rise of memecoin-related scams presents significant regulatory challenges, according to Anastasija Plotnikova, co-founder and CEO of blockchain regulatory firm Fideum.
Source: Kobeissi Letter
“Memecoins have evolved from community-driven social experiments into a chaotic landscape dominated by value extraction from retail investors,” Plotnikova told Cointelegraph, adding:
“Insider rings, pump-and-dump schemes, and sniper groups have replaced the organic, collectible nature of original memecoins, creating an unhealthy playing field.”
Related: TRUMP, DOGE, BONK ETF approvals ‘more likely’ under new SEC leadership
Investors will also need to distinguish between memecoins that can be seen as genuine “collectibles” and “outright fraudulent activities” like rug pulls which are “not only unethical but also clearly illegal, with case law to support enforcement.”
“In my view, these activities should fall firmly within the jurisdiction of law enforcement agencies,” she added.
More troubling revelations have emerged since the meltdown of the Milei-endorsed Libra token, notably that Libra was an “open secret” in memecoin insider circles and that some members of the Jupiter decentralized exchange knew about the token launch two weeks in advance.
Related: Trump to host first White House crypto summit on March 7
Memecoin scandals unlikely to impact US crypto legislation
While the recent memecoin meltdowns are a negative hit for investor sentiment, they may not impact emerging cryptocurrency regulation in the long term, according to Dmitrij Radin, the founder of Zekret and chief technology officer of Fideum.
This is because crypto legislation is built with a “long term” perspective, not just based on recent events, he told Cointelegraph.
It’s also important to understand that the Libra rug pull was different compared to the launch of the Official Trump (TRUMP) and the Official Melania Meme (MELANIA) tokens, with the latter two unlikely to trigger a regulatory response in the US, Radin said, adding:
“David Sacks, the US crypto czar, mentioned that memecoins are more of a collectible. So it shouldn’t be regulated as security or anything like that.”
“That’s why I believe that Trump and Melania coins might be taken in a different way than Libra,” he added.
Magazine: Caitlyn Jenner memecoin ‘mastermind’s’ celebrity price list leaked
Bitcoin (BTC) $ 117,275.00
Ethereum (ETH) $ 3,756.44
XRP (XRP) $ 3.11
Tether (USDT) $ 0.999782
BNB (BNB) $ 801.88
Solana (SOL) $ 179.93
USDC (USDC) $ 0.999799
Lido Staked Ether (STETH) $ 3,753.72
Dogecoin (DOGE) $ 0.220889
TRON (TRX) $ 0.334636
Cardano (ADA) $ 0.772896
Wrapped Bitcoin (WBTC) $ 117,125.00
Wrapped stETH (WSTETH) $ 4,535.36
Hyperliquid (HYPE) $ 43.24
Sui (SUI) $ 3.80
Stellar (XLM) $ 0.414808
Chainlink (LINK) $ 17.63
Wrapped Beacon ETH (WBETH) $ 4,026.97
Bitcoin Cash (BCH) $ 561.74
Hedera (HBAR) $ 0.258599
Wrapped eETH (WEETH) $ 4,022.73
Avalanche (AVAX) $ 24.04
WETH (WETH) $ 3,754.72
LEO Token (LEO) $ 8.94
Litecoin (LTC) $ 107.89
Toncoin (TON) $ 3.37
Ethena USDe (USDE) $ 1.00
USDS (USDS) $ 0.999731
Shiba Inu (SHIB) $ 0.000013
Binance Bridged USDT (BNB Smart Chain) (BSC-USD) $ 0.999327
Coinbase Wrapped BTC (CBBTC) $ 117,242.00
WhiteBIT Coin (WBT) $ 43.73
Uniswap (UNI) $ 10.14
Polkadot (DOT) $ 3.84
Monero (XMR) $ 314.30
Bitget Token (BGB) $ 4.50
Pepe (PEPE) $ 0.000011
Cronos (CRO) $ 0.143094
Ethena Staked USDe (SUSDE) $ 1.19
Aave (AAVE) $ 280.21
Dai (DAI) $ 0.999842
Ethena (ENA) $ 0.564145
Bittensor (TAO) $ 377.08
NEAR Protocol (NEAR) $ 2.67
Ethereum Classic (ETC) $ 21.59
Pi Network (PI) $ 0.422181
Ondo (ONDO) $ 0.943524
OKB (OKB) $ 48.26
Internet Computer (ICP) $ 5.39
Jito Staked SOL (JITOSOL) $ 219.16
Mantle (MNT) $ 0.759569
Kaspa (KAS) $ 0.094952
Aptos (APT) $ 4.48
BlackRock USD Institutional Digital Liquidity Fund (BUIDL) $ 1.00
Pudgy Penguins (PENGU) $ 0.036966
Binance-Peg WETH (WETH) $ 3,753.50
Algorand (ALGO) $ 0.256579
USD1 (USD1) $ 0.998880
Bonk (BONK) $ 0.000028
Arbitrum (ARB) $ 0.418548
VeChain (VET) $ 0.024555
Cosmos Hub (ATOM) $ 4.54
Gate (GT) $ 17.44
Render (RENDER) $ 3.88
POL (ex-MATIC) (POL) $ 0.218726
Fasttoken (FTN) $ 4.57
Worldcoin (WLD) $ 1.06
Official Trump (TRUMP) $ 9.37
Sei (SEI) $ 0.317660
SPX6900 (SPX) $ 1.98
Sky (SKY) $ 0.085099
Artificial Superintelligence Alliance (FET) $ 0.692025
sUSDS (SUSDS) $ 1.06
Binance Staked SOL (BNSOL) $ 191.74
Rocket Pool ETH (RETH) $ 4,271.39
Quant (QNT) $ 119.38
Filecoin (FIL) $ 2.53
Story (IP) $ 5.79
Flare (FLR) $ 0.024400
Kelp DAO Restaked ETH (RSETH) $ 3,936.86
Lombard Staked BTC (LBTC) $ 117,257.00
Jupiter Perpetuals Liquidity Provider Token (JLP) $ 5.03
XDC Network (XDC) $ 0.098220
Jupiter (JUP) $ 0.528471
USDtb (USDTB) $ 0.999817
KuCoin (KCS) $ 11.28
StakeWise Staked ETH (OSETH) $ 3,948.87
Mantle Staked Ether (METH) $ 4,019.92
Liquid Staked ETH (LSETH) $ 4,058.37
USDT0 (USDT0) $ 0.998581
Injective (INJ) $ 13.93
Curve DAO (CRV) $ 0.972545
First Digital USD (FDUSD) $ 0.999583
Celestia (TIA) $ 1.83
NEXO (NEXO) $ 1.31
Optimism (OP) $ 0.715332
Renzo Restaked ETH (EZETH) $ 3,946.96
Polygon Bridged USDT (Polygon) (USDT) $ 0.999828
Stacks (STX) $ 0.764515
Falcon USD (USDF) $ 0.999713