Warren and Blumenthal Press SEC to Probe Trump Memecoin as Possible 'Soft Rug Pull'

Democratic senators Elizabeth Warren and Richard Blumenthal have written to the Securities and Exchange Commission (SEC) asking them to investigate whether President Donald Trump's memecoin was an illegal scam. The coin, known as $TRUMP, briefly touched a market value of about $9 billion in January 2025 but has since plummeted to under $400 million.

Nansen data estimates that close to a million people have lost around $3.8 billion to the president's venture as of June this year. The senators describe the episode as a possible 'soft rug pull', where price support is withdrawn gradually rather than in one sudden dump.

The SEC has been asked to detect any illegal fraud or unjust enrichment that the coin may have facilitated. However, the request runs into a jurisdictional wall built by the Trump administration, with the agency issuing guidance in February 2025 stating that a memecoin is not a security, narrowing their authority to police these tokens.

A blockchain intelligence firm, TRM Labs, has knocked down the rug pull theory, saying the project 'does not have the hallmarks of a rug pull'. However, Ari Redbord, TRM's global head of policy, conceded that most buyers who invested later lost money while the few holders who controlled 80% of the supply walked away with gains.