Democratic Senators Elizabeth Warren and Richard Blumenthal are urging the Securities and Exchange Commission (SEC) to investigate President Trump’s memecoin, which they claim may constitute an ‘illegal scam’. The memecoin, launched by Trump in 2025, briefly surged in value before crashing and leaving nearly a million investors with significant losses.

Concerns Over ‘Rug Pull’ Scheme

Warren and Blumenthal expressed concerns that the memecoin effort could be a ‘rug pull’ scheme, where developers artificially inflate the value of a token before suddenly abandoning it and leaving investors with significant losses. The SEC has previously charged individuals with perpetrating ‘rug pull’ fraud, but it is unclear whether the agency has jurisdiction to investigate alleged rug pulls in the crypto world.

The Trump memecoin, which was 80% owned by Trump Organization affiliates, reached a peak value of $9 billion in January 2025 before plummeting to less than $400 million. The significant decline in value has resulted in steep losses for investors, with nearly 1 million people losing a total of $3.8 billion.

SEC Guidance on Memecoins

In February 2025, the SEC issued guidance clarifying that memecoins are not considered securities, but noted that this guidance does not apply to products labeled as memecoins in an attempt to evade federal securities laws. Warren and Blumenthal argue that Trump’s memecoin is a case that warrants evaluation by the SEC to determine whether it constitutes a security and whether investors are protected by federal securities laws.

Original reporting: El Paso News (HLL/CB) — read the source article.