At 02:01:33 am UTC on January 18, a crypto trader identified only by their wallet address—an alphanumeric string ending in J9tXv—purchased $1.1 million worth of TRUMP, a new cryptocurrency launched by US president Donald Trump. The trade stands out partly for its size but mostly for its timing: Trump had publicly unveiled the coin barely two minutes earlier.
In the minutes immediately after the announcement, other traders purchased similarly large amounts of TRUMP: One invested $500,000, two others $250,000 apiece, and another $50,000. Like J9tXv, their identities are concealed behind their crypto wallet addresses.
As the hours passed, word spread, investors piled in, and the price of TRUMP ballooned. At its peak, the value of the circulating coins exceeded $14 billion. The early traders, who by now had made a killing, began to cash out.
On January 18, J9tXv moved their entire TRUMP stash to another wallet. The lion’s share of the coins were then diverted to yet further wallets and mostly sold. The remainder were sold the following day across nine transactions, which brought in more than $30 million. In all, the original trade returned many tens of millions of dollars in profit.
WIRED asked two experts in crypto forensics to analyze these early TRUMP trades. Though multiple theories might explain their striking punctuality—among them blind luck—another possibility is that the traders were warned of the launch in advance, the crypto forensics experts hypothesize. In trading any new asset, an alleged early warning would put any trader at an immense advantage, allowing them to buy in earlier and at a lower price than almost everyone else.
“To be that quick off the mark, it’s hard to imagine that they had no forewarning,” says Paul Sibenik, CEO at CryptoForensic Investigators, a company that investigates crypto-related cybercrime.
Though new crypto coins are frequently traded in the minutes after launch, the willingness of J9tXv and others to wager such large sums on TRUMP in those early moments—when people were still scrambling to work out whether the coin was the real deal—is highly irregular, says John Powers, president at the private investigation agency Hudson Intelligence.
“Someone that has an active investment portfolio or team of people that are managing money could certainly put together a plan and make an informed decision within twelve to twenty-four hours,” alleges Powers. “But something that happens in the first 90 seconds suggests either potential advanced insider knowledge or some other possible explanation.”
The White House press office declined to comment. A request for comment delivered to the email address listed on the TRUMP website went unanswered.
TRUMP is pitched as a memecoin, a type of cryptocurrency that typically serves no purpose, promises no utility, and has no underlying business model. The price of a memecoin tends to swing violently with the caprices of the public mood.
In the memecoin trading game, getting in early is everything. “There’s no fundamental value in any of these coins, so it’s about just being very, very early,” says Aurelie Barthere, principal research analyst at the blockchain analytics company Nansen, which analyzed patterns in the trading data for WIRED.
The crypto wallets that invested the largest sums in TRUMP largely purchased the coin on January 18, the day it launched, according to Nansen analysis. The wallets that achieved the greatest return on their TRUMP investments, meanwhile, had largely sold off their holdings by January 20, by which time the price had already tumbled from its peak. The circulating TRUMP coins are now valued at $5.4 billion.
“The earlier you are, the more you can bet. But if you’ve bet a lot, it doesn’t make sense to stay a long time, because it’s not going to be [the next] Apple or Nvidia,” says Barthere. “There is zero value. So for sure it’s going to go down.”
Among the wallets that have profited most handsomely from TRUMP, Nansen data shows, are many that dealt in comparatively small sums, which implies that some regular people managed to beat the crowd in the same way as the big early traders. In the midst of the high-value trades placed by J9tXv and others in the minutes after TRUMP launched, armchair traders were throwing down as little as 50 bucks.
Beyond an incredible stroke of fortune and gall, Sibenik and Powers claim, only one other theory could explain traders plowing hundreds of thousands of dollars into TRUMP so soon after it was unveiled: The trades were placed by automated sniping bots.
Sniping bots are typically programmed to snatch up multiple different coins immediately after launch, says Powers. Some of the wallets used to place the early high-value TRUMP trades do contain tens of other memecoins, but others, including J9tXv, contain only a few.
“What we would not expect to see from a bot would be an acquisition of one token only with a large position, especially if that token hadn’t been previously announced. That activity seems too specific,” says Powers. “How do you code the script for a bot to acquire one token before you know it exists?”
Most sniping bots are also programmed to deal in smaller dollar amounts, says Sibenik. “[The big early traders] either being insiders or having insight from another party are more likely explanations, especially given the very large amounts invested,” Sibenik says.
In the absence of any rules governing memecoins in the US, it may not necessarily be illegal for an issuer to give early notice to select parties.
Recently, multiple federal lawsuits brought by investors have sought to argue that memecoins should fall under securities laws, governed by the Securities and Exchange Commission, a regulatory agency tasked with protecting US investors. But in an interview on January 23, venture capitalist David Sacks, appointed by Trump as the US AI and crypto czar, claimed that memecoins should be treated as a type of collectible, an unregulated asset class.
In an executive order signed on January 23, Trump established a “working group on digital assets,” which he tasked with recommending appropriate crypto-related regulation and legislation.
“The cryptocurrency industry is still driving for clarity on regulation. The major players want to be seen as good faith actors in financial markets,” says Powers. “There has been some disgruntlement expressed from within the [crypto] industry of this memecoin offering seeming to take advantage of the moment.”
At the foot of the TRUMP website, a small-print disclaimer asserts that the memecoin is “not intended to be, or to be the subject of, an investment opportunity, investment contract, or security of any type.” The terms and conditions, meanwhile, stipulate that investors must waive the right to bring a class action lawsuit in relation to the memecoin. They also claim that investors are not entitled to pursue damages, even in the event of “deceptive and unfair trade practices” and “misrepresentation” on the part of the Trump-affiliated company administering the coin.
“That’s a stunning caveat,” says Powers. “Whether those kinds of waivers and disclaimers would actually hold up in court is another matter. But setting down the road with that attitude is not in keeping with the hope of the crypto industry to turn the page on what came before.”
Source : Wired
