Even for the uninitiated, the once-obscure corner of the crypto market has become hard to ignore. Often with no actual use case and values derived from speculation, meme coins have gone mainstream, for better or worse.
The tokens have been generating baffling headlines and lots of frustration.
This week, Argentine President Javier Milei was in hot water after promoting Libra, a meme coin that tanked seismically soon after. Nansen Research found that 86% of investors lost $251 million, a scandal that's left Milei facing impeachment calls for his role in what critics describe as a fraud.
Milei denied any involvement with the coin or its developers and deleted his post. Regardless, the whole affair had the look of a rug-pull to frustrated crypto players.
Scams are a regular occurrence in the meme coin universe, and its reputation for fraud has grown alongside the market, experts told Business Insider.
"Everyone's sick and tired of the memecoins," said Nic Puckrin, founder of The Coin Bureau.
"Sentiment now is probably as low, or probably lower than the FTX collapse," he said. "It's just every single day there's a new meme coin launch with some new celebrities pumping and dumping some stuff."
It wasn't always this way.
When meme coins started edging into crypto consciousness around 2014, they were mainly community-building projects, Puckrin told BI.
"The initial concept was fun assets that communities could be part of, and the whole memetic culture of memes in general on the internet could now be encapsulated in a shared token, right?" he said. Add to that their low valuations, and the memecoin market became something of a haven for retail investors.
Even as momentum stalled amid crypto winter in 2022, Vic Laranja, a content creator and meme coin trader, said the market was still trafficked mainly by crypto enthusiasts who believed in the technology.
That was before last year.
"There's been just a drastic emergence of retail investors who see meme coin trading almost as a new form of gambling."
Puckin also lamented the state of the market.
"Memecoins are no longer about community, no longer about fair launches, no longer about aspects against the [venture capitalists]." he said. "The memecoin industrial complex developed to be able to extract as much as possible, as quickly as possible, for those who invest in it, which is not what the idea was."
The casino opens
According to Laranja, the first stage of the meme coin explosion took place around the time spot bitcoin ETFs were launched at the beginning of 2024. The resulting surge in liquidity stirred up risk appetite in the crypto market.
The same month the ETFs debuted, traders were introduced to Pump.Fun, a Solana-based launchpad that simplified the process of minting the tokens.
The result? An "explosion of meme coins," said Puckrin. According to Wired, there were nearly 6 million meme coins launched on the platform by January 2025.
In some ways, the launchpad helped do away with some nefarious behavior. Before its existence, Laranja suspects about eight out of 10 memecoin trades were "honeypot" scams, in which a buyer cannot sell their memecoin holdings once purchased.
"Pump.Fun came into the picture, and they standardized the contract address. They made it so you had to revoke freeze authority. You had to revoke mint authority — meaning that the developer couldn't just mint a billion more tokens and keep them for themselves."
But the protocol's design did not curb pump-and-dump schemes or other practices that have given meme coins their reputation as essentially another way to gamble.
A class action lawsuit was brought against the firm last month, alleging that it is operating an "evolution of Ponzi and pump-and-dump schemes."
Memecoin trading on the platform has ruffled investors in other ways. For a time, it allowed livestreaming as a way to promote tokens, but given the wild extremes users went to in order to draw attention their coins — from nudity, guns, and suicide threats — that went away in November.
"I believe that the problem in the space right now, with the insiders and the bundlers and the snipers is not so much about the bad actors in the space, but because of the way that the protocols are set up to launch these meme coins," Laranja said.
A need for change
When the Trump Organization launched its own meme token just before the inauguration, some say the dramatic price swings blew the doors open for imitators.
"[Investors] would have been somewhat apprehensive to launch a meme coin just because of the regulatory risk, the risk of getting sued and whatnot," BCA Research associate strategist Juan Correa said. "Well, now the president has done it. It's okay to do it, right?" (BCA launched its own meme coin this month to prove the speculative mania was peaking.)
As the frenzy stretches into the early days of 2025, exhaustion is setting in.
Solana, the native token associated with the blockchain that meme coins are usually launched on, has dropped around 32% from its all-time high in January, after getting a boost from the meme coin ecosystem early in the year.
Observers also say there will be consequences for the market if meme coins proliferate at such a dizzying rate.
Correa said the tokens detract from more fundamental crypto assets. They are an "extractive force, Puckin added, noting that profits made on these trades are rarely recycled back into the crypto space.
"It's not going to necessarily go into developing an innovative product that's going to help solve real problems for the world, which is what I think we all think crypto and the blockchain can do," Puckrin said. He estimated that $6 billion worth of crypto liquidity has been leeched from the ecosystem due to meme coins.
Still, the regulatory path ahead is unclear.
On Thursday, the Securities and Exchange Commission announced the creation of a unit to combat cybercrime, including blockchain fraud. However, earlier this month, Commissioner Hester Pierce questioned whether meme coin oversight is an SEC responsibility.
In Puckrin's view, this goes back to an ongoing regulatory question about what type of asset crypto is and, therefore, whose jurisdiction it falls under.
"But what's been happening more recently, I think, especially with a lot of these memecoin launchers, is pure criminality and insider trading," he said. "And insider trading doesn't necessarily have to be a security or a commodity."
To Laranja, clear rules will be the catalyst to take the crypto space to the next level. Until then, he feels sentiment has fallen to deep lows.
"People are basically calling it quits, game over," he said. "I think there's a beautiful future ahead of us, but we need clarity first."
