Meme Coin: The Shift from Community-Driven to Speculative Battleground

Meme coin was initially seen as a community-driven digital asset, but it has increasingly become a tool for retail investors to be exploited. With the rise of scams and failed projects, regulatory concerns have also intensified.

The collapse of the Libra (LIBRA) token is the latest blow to the industry, with the $4 billion project plummeting 94% in price within hours of its launch after cashing out $107 million in liquidity in its internal wallet.

Anastasija Plotnikova, co-founder and CEO of blockchain regulatory company Fideum, stated that the increase in scams related to Meme coins has brought severe regulatory challenges.

Plotnikova pointed out: “Meme coins have evolved from community-driven social experiments into a chaotic situation primarily aimed at extracting value from retail investors.” She added: “Insider circles, price manipulation, and short-seller groups have replaced the original organic and collectible nature of Meme coins, creating an unhealthy competitive environment.”

Investors must learn to distinguish between Meme coins that can truly be considered “collectibles” and “outright fraudulent activities,” such as rug pulls, as these actions are “not only unethical but also clearly illegal, with case law supporting enforcement.”

“In my opinion, these activities should fall entirely under the jurisdiction of law enforcement agencies,” she emphasized.

Since the collapse of the Libra token, more troubling inside stories have been revealed, especially Libra, which is considered an “open secret” in Meme coin’s inner circles, and some members of a certain DEX knew about the token’s release plans two weeks in advance.

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The impact of the Meme coin scandal on U.S. cryptocurrency legislation is limited

Dmitrij Radin, the founder of Zekret and the Chief Technology Officer of Fideum, believes that although the recent collapse of Meme coins has negatively affected investor sentiment, these events may not have a substantial impact on the emerging cryptocurrency regulatory framework in the long run.

He explained that this is because cryptocurrency legislation is typically formulated from a “long-term” perspective, rather than solely based on individual events that have recently occurred.

It is worth noting that the appeal of Libra is different from that of the TRUMP and MELANIA tokens, as the latter are less likely to trigger regulatory responses in the United States. Radin added:

“Industry experts have mentioned that Meme coins are more akin to collectibles. Therefore, they should not be regulated as securities or similar financial instruments.”

“This is why I believe that the Trump and Melania coins may be accepted by the market in a different way than Libra,” he added.