EddieJayonCrypto
2 Jun 25
SEC Commissioner Hester Peirce stated that memecoin investors should not expect protection from the SEC, as most memecoins fall outside its regulatory scope and are not classified as securities. She highlighted the need for clear legislative guidelines and suggested the Commodity Futures Trading Com...
SEC Commissioner Hester Peirce has issued a stark warning to memecoin investors: the SEC does not provide protection for losses in this largely unregulated market. Most memecoins fall outside the SEC’s jurisdiction, with the Commodity Futures Trading Commission (CFTC) possibly better equipped to oversee these assets. Peirce likened memecoins to NFTs, emphasizing their lack of intrinsic value and the high volatility that often results in severe loss after initial hype.
The Trump memecoin exemplifies these risks, having experienced a dramatic surge to a $30 billion market cap before crashing. Retail investors suffered heavy losses totaling around $2 billion, while insiders, controlling over 80% of the supply, profited by at least $100 million in trading fees. Similarly, Melania Trump’s memecoin insiders earned substantial profits shortly before its public launch.
Concerns about conflicts of interest have been raised due to Trump and his associates profiting from memecoin activities during his political tenure. A controversial gala dinner for top memecoin holders fueled further allegations, although the White House dismissed claims of impropriety.
Overall, the SEC’s stance leaves memecoin investors vulnerable to scams and fraud without regulatory recourse. Peirce stresses that investors should not expect SEC protection in this space, highlighting the urgent need for clear legislative guidelines. As the SEC steps back, the responsibility falls on investors to navigate these risky assets with caution and awareness.