2024-12-14 20:55 |
Meme coins have been all the rage this bull season, and everyone from retail investors to mainstream celebrities has hopped in on the trend to capitalise on the hype and chase explosive short-term gains.
What was once a nice subset of the crypto sector limited to Dogecoin has become a multi-billion dollar market that peaked at over $137.6 billion as of December 2024.
Meme coins blend elements of popular culture, humour, and social media trends with decentralised tokenomics to create hype-driven cryptocurrencies.
The promise of quick profits, often fueled by endorsements from high-profile figures, draws in countless investors who are lured by the potential for quick returns.
While some of these tokens have made people rich overnight, the harsh reality is that most meme coins lack real value, with many investors losing heavily due to hype-driven movements and insider trading schemes.
From Hawk Tuah to Mother, this season’s implosions reveal that celebrity endorsements may drive hype but provide no guarantee of legitimacy, as 90% of such tokens ultimately fail, leaving investors to bear the losses.
Riches to ragsPerhaps the most talked-about meme coin this fall was Hawk Tuah (HAWK), inspired by Hailey Welch’s viral 2024 interview where she famously said, “You gotta give ’em that ‘hawk tuah’ and spit on that thing.”
The comment went viral in no time, and as Welch capitalised on her newfound fame, the idea of a meme coin emerged amid the crypto community’s embrace of the meme coin season in October.
Lighthearted endorsements, including one from Mark Cuban on her podcast, helped turn the concept into reality.
However, HAWK’s December 4 launch was disastrous, with its value plummeting 91% in just three hours as allegations of sniping and insider trading surfaced across social media.
The token’s market cap had tumbled from $500 million to $60 million within 20 minutes post-launch.
Another infamous case of pump and dump involves masculinity influencer and self-proclaimed misogynist Andrew Tate, who launched the Solana-based meme coin Daddy Tate (DADDY).
Marketed as a symbol of male empowerment with the slogan “flip it for the patriarchy,” the token quickly drew criticism after on-chain analytics by Bubblemaps revealed substantial insider trading.
Insiders had allegedly acquired 30% of the supply early, with holdings valued at over $45 million, raising concerns about fairness and transparency.
Things got worse after the crypto community hopped in to investigate and found that 11 Binance-linked wallets purchased 20% of the supply on June 9, just before Tate’s promotion on X.
While Tate himself did not sell his tokens, the coordinated insider activity positioned these holders for massive profits, while clueless investors were left with nothing but worthless tokens and regrets.
Popular singer and dancer Jason Derulo’s token was no exception to controversy.
Launched in June 2024, Jason (JASON) quickly rose to massive heights after Derulo’s promotions but saw its value crash by over 70% shortly after, leaving investors furious.
Derulo pinned the blame on crypto influencer Sahil Arora, accusing him of engineering a pump-and-dump scheme for personal gain.
But Bubblemaps suggested otherwise. It revealed that wallets allegedly linked to Arora controlled half of JASON’s supply and sold almost all of it, after Derulo’s promotional post.
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.”
The list goes on, from Caitlyn Jenner and Davido to Iggy Azalea and 50 Cent, but the common thread among these celebrity-backed tokens is that the overwhelming majority lose most of their value once the initial hype fades.
And it extends beyond celebrities to everyday influencers, many of whom are equally guilty of endorsing useless tokens for their monetary gains.
90% of celebrity-backed tokens die in three monthsA November study by research firm Coinwire that analysed meme coins launched by 377 influencers on X found that 76% of these promoted meme coins had lost over 90% of their value and hence were considered dead.
Within three months, 86% of these tokens reportedly dropped by ten times, with the report claiming that only 3% of meme coins promoted by influencers delivered on the gains as promised.
The worst part was the fact that several influencers were found to be promoting tokens that had no activity in the hopes of lining up their pockets.
While investors often lose their life savings trading these volatile cryptocurrencies, influencers were found to be earning an average of $399 for every promotional tweet.
Sadly, in most cases, there’s little recourse for small investors, as the legal situation surrounding these promotions remains complex.
The legal repercussionsIn simple terms, manipulating markets is and will always be a crime. Celebrities and influencers found guilty of such activities can face charges ranging from fraud to securities violations.
Even in the unregulated and evolving world of meme coins, prosecutors don’t need new laws to hold individuals accountable—they can simply apply existing criminal fraud statutes to these cases.
To convict a celebrity involved in a pump-and-dump scheme, prosecutors must show that the celebrity intentionally devised a strategy to deceive investors, intended to profit at their expense, and used communication tools like phones or the internet to execute the scheme.
However, the fraud must have impacted interstate or international trade, which is almost always the case in cryptocurrency transactions.
So, while the meme coin craze might feel like a free-for-all, legal consequences are very real. If a token launch looks and operates like a pump-and-dump, prosecutors can and will connect the dots to bring charges.
But the reason we don’t see many charges is that regulators focus their limited resources on high-profile cases where they can recover significant sums in disgorgement rather than going after smaller influencers or vague promotions that would cost more to pursue than they’re worth.
ConclusionMeme coins might be a boon for many, but the majority of investors have seen their dreams turn into nightmares. This doesn’t mean that all cryptocurrencies in this category are bad, as several of these projects feature strong communities and are often backed by a solid cause.
Still, investors must be extremely cautious and do proper research before putting their hard-earned money into these risky assets.
One thing is for certain: meme coins are not going to go away anytime soon, and with the introduction of platforms like Pump.fun and Sun Pump, which makes launching a meme coin as easy as installing an app on a smartphone, the trend is only going to get more intense.
Instead of following the hype, pundits like Changpeng Zhao and Vitalik Buterin recommend focusing on cryptocurrencies that actually provide real value or solve real problems.
Focusing on utility is always a smarter way to support meaningful growth in the crypto space because, ultimately, that’s what will decide the viability of the crypto and blockchain industry in the long run and not that token based on an image someone found funny.
The post From HAWK to JASON, how celeb-fueled meme coins turned dreams into nightmares appeared first on Invezz
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