Senator Warren Calls Trump’s Memecoin an ‘Illegal Scam,’ Urges SEC Investigation

President Donald Trump’s official TRUMP memecoin is under pressure after two senior Democratic senators asked the U.S. Securities and Exchange Commission (SEC) to investigate whether the token harmed investors. 

The lawmakers claim nearly one million wallets lost billions of dollars as the token crashed, raising new questions about insider profits and investor protection.

Warren Wants the SEC to Investigate Trump’s Memecoin

Senator Elizabeth Warren and Richard Blumenthal have sent a letter to SEC Chair Paul Atkins asking the agency to investigate the TRUMP memecoin.

“We are concerned that President Trump’s memecoin scheme may constitute an illegal scam.”

The senators say that the token may have worked like a “soft rug pull,” where insiders slowly sold their holdings while regular investors were left with heavy losses.

According to the lawmakers, the token reached a market value of nearly $9 billion shortly after launching before losing more than 97% of its value. 

Last month, Coinpedia news reported that around 988,905 investor wallets have lost a combined $3.8 billion, while nearly 66% of all buyers ended up losing money.

The White House declined to comment and referred questions to the Trump Organization.

Lawmakers Question Insider Profits

The letter also points to President Trump’s crypto earnings. According to his financial disclosures, Trump earned around $636 million in royalties and licensing fees tied to “Celebration Coins” and related memecoin projects. 

Combined with profits linked to World Liberty Financial, the senators say Trump’s crypto-related earnings exceeded $1.4 billion during his first year.

Warren also argues that companies linked to Trump and close insiders initially controlled around 80% of the token supply. Instead of selling everything at once, they allegedly reduced their holdings over time, putting continuous pressure on the token price.

Can the SEC Actually Investigate the Token?

One major question is whether the SEC has the legal authority to act. Earlier in 2025, the SEC issued guidance saying that 

“Memecoins are generally not considered securities, that buyers are not protected under federal securities laws.”

However, the agency also said this guidance does not apply if a project labels itself a memecoin simply to avoid securities laws. That means regulators can still review projects case by case.

Warren and Blumenthal argue the TRUMP token deserves that review, asking the SEC to determine whether investors were misled and whether federal securities laws were violated.

Despite this allegation, the Official Trump token has seen a 2.5% jump in the last 24 hours, trading close to $1.50 with a market cap of $367.5 million.