A cryptocurrency previously associated with USA's First Lady Melania Trump is now facing significant criticism. Its meme token, "Official Melania Meme," based on Solana, has dropped 96% from its all-time peak. It has become a cautionary tale for meme coin investors who wanted quick profits.
It was also noticed by the launch of the token during the endorsement of Melania Trump. It looked like her husband's "Official Trump" coin. However, according to a recent report by Benzinga, the Melania token experienced problems right away.
Early Warning Signs:
Questions about the project's goals, ethical implications and token structure emerged early on. Those concerns now appear to be well-founded. Recent blockchain analysis however suggests that the team could be quietly dumping large amounts of tokens for their own profit, at the expense of regular investors (Benzinga).
Millions Transferred From Community Funds:
Bubblemaps, a blockchain analytics firm, reported last Monday some troubling activity, according to Benzinga. They accused of large-scale sell-offs of the MELANIA token. The project's team is accused of siphoning millions of tokens from community coffers. These funds are used by project contractors for growth and user incentives.
Fifty million tokens or approximately $30 million were transferred directly from the community fund, said Bubblemaps. Of that, $3 million was sent to crypto exchanges. About $500,000 has been sold off so far, the analysis found.
Red Flags Over Past Withdrawals
It is not the first time suspicious activity has taken place. Only 10 days ago Bubblemaps traced a $2 million withdrawal from the token's liquidity pools. Almost $1 million of that made it to exchanges. The man who allegedly initiated the withdrawal was a prominent figure in the crypto world named Hayden Davis, according to Benzinga. Well, Davis is behind the embattled LIBRA token in Argentina, too.
The Token Supply Is Concentrated Among Insiders
Worse still, the native MELANIA token has around 92% of its supply held in wallets associated with the project's team. This grants the team near-total market control. Bubblemaps issued a caution that even more damage is yet to come, as reported by Benzinga.
"The damage is not done," the firm said, referring to the high concentration of tokens in insider wallets. This exposes retail investors to true risk.
What's Next?
The sharp drop and controversy surrounding the MELANIA token is part of a wider trend of dubious meme coin speculation. Many of these tokens are driven by hype rather than sound fundamentals, leading investors to hope for a viral move. But as the example of MELANIA demonstrates, the stakes can be steep.
Critics are now calling for greater transparency in such projects. They're demanding tighter regulation and warning investors to do their due diligence before deciding to buy celebrity-endorsed coins.
