From cointelegraph by AILSA SHERRINGTON

Just days before US President Donald Trump’s inauguration, the crypto industry was taken relatively by surprise with the launch of Official Trump (TRUMP), which was swiftly followed by Official Melania (MELANIA) — two memecoins launched by the first family that have pumped and yo-yoed in the days that followed.

​​The president’s memecoin hit a peak of $72 on Jan. 19, then dipped to $44 on Jan. 20 when MELANIA launched. The coin briefly recovered while the president was sworn into office and has since hovered around the $40 mark. At the time of writing, the president’s memecoin is $37 — down 49% from its peak.

If speculation is to be believed, more official memecoins by the Trump family are on the way. Though touted as “memecoins,” their significance is unprecedented.

It was difficult to imagine an incoming American president launching his own memecoin before Jan. 18.. Now, it’s hard to picture TRUMP and other tokens not playing a pivotal role in the US political sphere.

As crypto lawyer Preston Byrne wrote in a blog post, “Crypto is going to be a bigger political football than it’s ever been. Everyone who cares about politics is going to care about it, with no exceptions.”

This includes Democrats and disgruntled investors, who, according to Byrne, are 100% likely to sue the project within two months.

Is TRUMP even illegal?

James Thurber, founder and former director of the Center for Congressional and Presidential Studies, told the Guardian that Trump is blatantly profiting from his own pro-crypto agenda.

“There are shameful and major conflicts of interest with respect to his family business benefiting from his cryptocurrency policies,” Thurber said. 

Ryan Lee, chief analyst at Bitget Research, told Cointelegraph that TRUMP has “drawn new investors into the space.” But new audiences aren’t necessarily aware of what makes a sound investment. The launch of TRUMP and MELANIA has predictably made winners and losers, with some shedding millions of dollars as prices slumped.

Related: US CBDC ‘is dead’ under Trump, but stablecoins could be set to explode

Byrne believes these lost investments will inevitably lead to litigation. But what is the legal basis?

“To my knowledge, no court in the United States has determined that memecoins are explicitly legal,” crypto lawyer Aaron Brogan told Cointelegraph.

That said, they have historically been difficult to prosecute. Brogan explained that memecoins may not be classified as securities under the Howey test.

“This is because they are basically inert. They don’t do anything and are not tied to any project with a goal of developing useful applications. They just sit onchain, and people buy them for the memes.”

This is likely why the Securities and Exchange Commission largely avoided memecoins during its Gary Gensler era, instead opting for comparatively “easier” targets like XRP XRP$3.07 and SOLSOL$245.36.

“But regardless of why, launching a memecoin was less risky over the last four years than developing a bona fide project in cryptocurrency, which is probably the reason they have proliferated,” Brogan said.

So, memecoins exist in a sort of litigation vacuum, making it the best way for the Trump family to launch a token when all eyes were firmly on them. However, these memecoins are tied to arguably the most important people in the United States — so whether the intent or not, the value of TRUMP and MELANIA will likely serve as a litmus test of public sentiment.

As Byrne wrote:

“Trump Coin will now be tracked on CNBC financial shows, in newspapers, the price will be a reflection of the underlying tone of American society and the American project.”

Crypto lawyer Josh Lawler told Cointelegraph that the question is whether this should immediately place TRUMP and MELANIA into a different, regulated category.

“The unresolved and difficult question is whether the fact that a large segment of the global population is primed to turn this ‘consumer product’ into a major capital asset should automatically put it into a regulated category even though there is no ‘official’ communication of ongoing investment value,” he told Cointelegraph. 

“As of this moment in time, there is no law that would require that treatment.”

Democrats likely to sue anyway

Trump and his team of lawyers have clearly prepared for attacks from Democrats or others keen to see him bleed over these memecoins.

The terms of service on the TRUMP memecoin’s official website state that TRUMP is not intended to be, in any way, “an investment opportunity, investment contract, or security of any type.”

Lawler agrees that “an early assessment indicates that TRUMP is carefully crafted to avoid literal violation of laws including the Securities Act or the Foreign Emoluments Clause of the United States Constitution.”

And it is “absolutely unthinkable” that Trump would face legal threats from the federal government during his term, Brogan stated.

However, Byrne says that this won’t stop Democrats or certain investors from filing, say, a civil lawsuit. In fact, he’s banking on it.

The TRUMP terms include a class-action waiver and a clause requiring any litigation to be handled in arbitration (out of court), which serve to protect the project from civil lawsuits. Byrne wrote:

“This might make it tough for initial purchasers to bring a suit, but it’ll be easier for holders of tokens on secondary sales to argue that there’s no contractual privity between them and the project and so these terms shouldn’t apply.”

According to the crypto lawyer, there’s a 100% chance of a civil lawsuit within two months and a 90% chance of one filed in the next two weeks.

“I am absolutely certain this will happen. Someone will lose money, some lawyer will come up with a theory and file.”

Brogan agrees, telling Cointelegraph:

“Frankly, I think the torrent of legal filings is about to make Noah’s great flood look like a sun shower.”

What’s the worst that could happen?

As a man who became a convicted felon and then the 47th president of the US — in that order — it’s worth asking what, if anything, litigation will do to Trump. It may be difficult to legally pursue the leader of the “free world,” but it is not impossible.

“In Clinton v. Jones, the Supreme Court ruled that presidents are subject to suit for actions they took before becoming president,” Brogan explained. “So, it is possible that some of these lawsuits will get through.”

The issue is that Trump has developed Kevlar-grade skin. Some civil lawsuits, perhaps a few TRUMP associates hounded by state attorneys general… will these attempts lead to any real form of enforcement? Of protection for investors?

“He’s cultivated a coalition of supporters who are not interested in policing traditional mores of public conduct,” Brogan argued, “and the dividend from that effort is that he can do whatever he wants.”

“Trump has immanentized the crypto revolution,” Byrne concluded in his blog post. “We will each remember this day until we die, because we will be dealing with the consequences of this for the rest of our lives.”