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TRUMP Warren and Blumenthal urged the SEC to investigate $TRUMP Memecoin, which allegedly lost $3.8 billion to investors
Democratic Senators Elizabeth Warren and Richard Blumenthal called on the U.S. Securities and Exchange Commission (SEC) to launch a formal investigation into $TRUMP memecoin and its financial connections to President Donald Trump, his family and senior government colleagues.
Senators intensify scrutiny of Trump's cryptocurrency transactions
Warren and Blumenthal, who have repeatedly questioned Trump's financial connections to the digital asset world, are now urging the SEC, led by Chairman Paul Atkins, to determine whether the $TRUMP token constitutes an illegal scheme. In a letter seen by CNN, two senators specifically asked the agency to investigate whether the token facilitated any fraudulent activity or was unprofitable.
This action builds on previous initiatives. In April, Senator Adam Schiff joined them in calling for a more transparent investigation into a Trump-themed memecoin event at Mar-a-Lago, where exclusive contact with the president was reportedly a main attraction. By June, three more senators had signed a joint letter calling for regulatory review of a $500 million deal involving the Trump family's DeFi project, World Liberty Financial, and a United Arab Emirates partner.
Market data shows that the market value of the $TRUMP token, launched before the inauguration ceremony in January 2025, briefly hit US$9 billion, but according to CoinMarketCap data, the current trading volume has dropped below US$400 million.
"carpet pumping" charges and investor losses
Warren and Blumenthal's letter expressed concerns that President Trump may have participated in what is known in the cryptocurrency community as "rug pull"-the systematic withdrawal of liquidity by original supporters, causing the token to effectively become worthless. Nansen's estimates show that about 1 million investors have lost a combined $3.8 billion since the president got involved in the project.
Blockchain intelligence company TRM Labs determined in 2025 and reiterated this year that the project "does not have the characteristics of carpet pumping." Still, Ari Redbord, global policy director at TRM, pointed out that while a small number of early buyers and project creators made profits, most late investors suffered significant losses, especially considering that about 80% of the token supply is concentrated in the hands of a few holders.
Warren and Blumenthal described the project as a potential "soft carpet"-a gradual erosion of market support rather than a sudden collapse. They emphasized the importance of regulatory vigilance and wrote that laws must be enforced even if the person involved has significant political power.
SEC's jurisdictional obstacles
Due to regulatory changes implemented early in Trump's term, the SEC faces significant obstacles to its ability to act. In early 2025, the SEC filed a charge of "carpet pumping fraud" against a New York blockchain engineer, but a few weeks later, new guidance stated that memecoin was not a securities, greatly limiting the agency's regulatory powers over these tokens.
Questions to the White House were referred to the Trump Organization, and the SEC allegedly declined to comment on the matter. The two senators 'letters further make it difficult to pass new cryptocurrency legislation, as multiple Democrats continue to refuse to support regulatory bills until potential conflicts of interest related to assets held by the president are resolved.
Warren and Blumenthal reiterated that the SEC must be prepared to enforce the law, regardless of political clout, especially in cases involving large retail investor losses.
