Senators accuse Trump of "pulling the carpet" scam, causing heavy losses to Miecoin...

Why did the senator ask the SEC to launch an investigation?

Democratic Senators Elizabeth Warren and Richard Blumenthal have asked the U.S. Securities and Exchange Commission to investigate President Donald Trump 's memin, arguing that the currency's decline and losses reported by investors may warrant review under federal securities laws. In a letter sent to SEC Chairman Paul Atkins on Monday, the two senators cited reports that nearly 1 million cryptocurrency wallets have lost a total of $38.1 billion since the launch of the TRUMP token in January 2025. They accused the president of participating in a "carpet pulling" scam-a term used to describe situations where token promoters allegedly made profits while other holders suffered heavy losses.

"Despite the hype generated by the president's own public remarks, the value of the token has fallen sharply, and the SEC must investigate whether fraud has occurred and prevent further extracting huge value from hundreds of thousands of investors who trust Trump coin," the senators wrote in the letter. Warren and Blumenthal also claimed that Trump actively encouraged supporters to trade the token and made a profit of $636 million from it. The letter asked the SEC to determine whether the token's promotion, ownership structure, or trading activities violated securities laws or anti-fraud rules. The SEC declined to comment, and the White House did not immediately respond to a request for comment. These allegations have not been substantiated, and the SEC investigation itself does not constitute a finding of violations.

How does the controversy affect the Clarification Act?

The request comes as the White House and senators consider another ethical compromise aimed at restarting the Digital Asset Markets Clarification Act. The bill is broad and divides regulatory powers of the cryptocurrency market among federal agencies. Democrats previously rejected a proposal approved by Trump . One objection is that the ban on public officials and their spouses from issuing or sponsoring digital assets does not apply to other family members. Democrats also question whether the Justice Department should be responsible for law enforcement when the president controls the executive branch. The timetable for the latest negotiations is very tight. Senators are expected to leave on Friday for an August recess, after which the campaign could make it more difficult to complete a major bipartisan cryptocurrency bill before the end of 2026. The memin controversy adds another hurdle, as lawmakers are now debating not only whether the market needs clearer rules, but also whether elected officials and their families should be allowed to profit from the tokens while influencing regulators.

Investor revelation

The impact of the SEC's investigation request on cryptocurrency legislation may be more important than the immediate price of TRUMP tokens. Failure to address political ethics issues could delay passage of the Clarification Act and allow regulators to develop digital asset policies through institutional action rather than new federal laws.

Can the SEC investigate tokens that it claims are not securities?

The SEC has previously stated that typical memocoins are not securities because buyers typically do not buy them with enforceable profits, revenue or rights to business assets. This policy may make it more difficult to establish regular unregistered securities cases against TRUMP tokens. However, the agency's minicoin guidelines do not necessarily prevent it from investigating possible fraud, market manipulation or misleading statements. Legal analysis may depend on how the tokens are sold, how supply controllers, promoters describe them, and whether insiders use information unknown to the public to conduct transactions. Trump launched the token a few days before taking office in January 2025. As of Tuesday, according to market data, the market value of TRUMP tokens was approximately US$362 million, ranking 112th among cryptocurrencies. That valuation is well below the level during the initial trading boom. Senators 'use of the word "pulling the carpet" does not solve legal issues. Investigators need transaction records, ownership information, token allocation details and evidence of communication between project operators and primary holders.

What happens if Congress does not pass the bill?

If the Clarification Act fails to pass this year, it is expected that the SEC will continue to develop cryptocurrency policy through guidance, enforcement decisions, and exemptions under existing law. Under Atkins 'leadership, the agency has expressed opinions on multiple digital asset classes, including memin, and is preparing an innovation exemption for tokenized stocks. TD Cowen's Washington Research Group said on Tuesday it expects the SEC to continue to move forward with planned exemption relief if the Clarification Act does not advance this week. This approach could allow certain encryption products to advance without congressional approval, but leave major issues to agencies to explain. Future governments may revise these policies, and companies may face different rules, depending on whether the tokens are considered securities, commodities, collectibles or other types of assets. Investors should be watching whether the SEC officially launches an investigation into Trump minecoin, whether the White House accepts stricter ethical restrictions, and whether senators reach an agreement on the Clarification Act before leaving Washington. These decisions will determine whether U.S. cryptocurrency rules are set by legislation or continue to evolve through regulatory action.