US President Donald Trumps surprising launch of the Official Trump (TRUMP) meme coin fueled a frenzy as fans and day traders pushed billions of dollars in trading volume. A day later, First Lady Melania Trump joined the trend with her own meme coin, Official Melania (MELANIA), which added to the cryptocurrency craze.

But the result was damaging. Both the meme coins crashed soon. In fact, TRUMP and MELANIA coins were still down by over 50% and 80% since their peaks, respectively.

TRUMP, MELANIA On-Chain Activity

Recent findings from Chainalysis reveal a sharp contrast in the distribution and profitability of TRUMP and MELANIA token holders. While the majority of wallets containing TRUMP are retail buyers with small holdings, a select group of whales has seen significant gains. Approximately 50 wallets have realized profits of more than $10 million at the wallet level, which essentially depicted the outsized influence of these early or high-volume investors.

On-chain data from Chainalysis Reactor shows that after the minting of 1 billion TRUMP tokens, four wallets received the majority of the supply. This stash was either for direct holding or to provide liquidity on exchanges. Despite the concentrated distributions, the broader holder base largely consists of retail investors.

As of January 21, most wallets holding TRUMP or MELANIA contained less than $100 in tokens, which is indicative of widespread but modest retail interest. Over 80% of these investors hold under $1,000 in assets on the Solana blockchain, and half are new to Solana altcoins, creating wallets specifically to purchase TRUMP or MELANIA.

While retail participation is high, profits remain modest for most. Over 77% of wallets holding TRUMP have realized gains of less than $100. However, the dominance of whales continues, with 40 wallets holding over $10 million in TRUMP or MELANIA tokens, accounting for 94% of the total supply.

Increased Scrutiny

Despite the popularity of the two tokens, the move by the President and his wife has attracted significant criticism.

James Thurber, the founder and former director of the Center for Congressional and Presidential Studies, accused Trump of using his pro-cryptocurrency advocacy as a personal profit-making strategy. In a statement to the Guardian, Thurber said,

There are shameful and major conflicts of interest with respect to his family business benefiting from his cryptocurrency policies. (Trump) does not seem to worry about the public interest with respect to cryptocurrency. He seems to be driven by profit and wanting to be a major part of the billionaire class in the US.

Meanwhile, FinTAXs comprehensive analysis observed that there are legal, tax, and political risks for the TRUMP meme coin. Key concerns include SEC regulatory scrutiny (using the Howey Test), tax compliance challenges with 80% token ownership, and potential political finance violations. Risks include possible security classification, tax complications from token unlocking, and potential disruption of political donation norms.