Melania Trump's memecoin is at the center of a scandal: what the lawsuits are about
The cryptocurrency $MELANIA, which US First Lady Melania Trump began promoting in January, may have been part of an elaborate fraudulent scheme.
The cryptocurrency $MELANIA, which US First Lady Melania Trump began promoting in January, may have been part of an elaborate fraudulent scheme.
Wired reports this, citing a number of lawsuits.
The publication recalls that back in April, crypto investors filed a class-action federal lawsuit against Meteora crypto exchange co-founder Benjamin Chow and Kelsier Labs crypto venture firm co-founder Hayden Davis, accusing them of a multimillion-dollar fraud related to the $M3M3 memecoin.
The plaintiffs later filed a series of amended claims, expanding the allegations.
Now, the same plaintiffs have asked the court for permission to file another amended lawsuit, alleging that Chow was involved in a scam involving at least 15 cryptocurrencies, including the $MELANIA memecoin.
«The scheme allegedly cost unsuspecting investors millions of dollars in losses. The proposed second amended version of the lawsuit alleges that Trump, who is not a defendant in the lawsuit, was used as a ‘cover for a crime orchestrated by Meteora and Kelsier Labs,’» the media outlet writes.
The defrauded investors claim that by the time $MELANIA launched in January, Chow and Davis had perfected their scam plan.
Among other things, Davis prepared a carefully coordinated marketing campaign for $MELANIA before the meme coin was launched, engaging a network of paid crypto influencers to simultaneously flood social media platforms with promotional messages. The lawsuit alleges that the influencers presented the coin as «fair» and «community-oriented.»
However, within hours of the start of public trading, as the hype began and investors rushed to buy $MELANIA, the coin’s price increased twelvefold. It has since lost 95% of its peak value.
«Investors reasonably interpreted the use of Melania Trump’s name and image as evidence of legitimacy and due diligence, believing that no one of her stature would knowingly cooperate with fraudsters,» the second amended version of the lawsuit states.
But it turned out that even before launch, wallets controlled by Meteora and Kelsier had allegedly accumulated almost a third of the entire $MELANIA supply. «Insiders had already captured the market before even a single public buyer could take action,» the document states.
According to him, as the price of $MELANIA rose, insider wallets began selling the asset, making millions of dollars within hours of the launch. The heavy selling, in turn, led to a price collapse, causing significant losses for ordinary people.
Although the complaint does not allege any wrongdoing by Melania Trump, the publication recalls that her family has been heavily criticized for numerous interventions in the crypto industry, which critics have called a clear conflict of interest.
«The dishonest use of Melania Trump’s name compounded the damage. It lent credibility to what was really a standard money laundering scheme,» Wired quotes the documents as saying.
As dev.ua wrote, on January 20, US First Lady Melania Trump introduced her own memecoin $MELANIA, the market capitalization of which initially increased to $5 billion.
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