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A federal class-action lawsuit claims that two men behind the “$MELANIA” cryptocurrency ran a pump-and-dump scheme that generated millions of dollars for insiders while leaving ordinary investors with major losses.
The lawsuit claims that U.S. First Lady Melania Trump was allegedly exploited as “window dressing” in the multimillion-dollar memecoin scheme that misled investors.
- A federal lawsuit accuses two men of running a multimillion-dollar pump-and-dump scheme using the $MELANIA cryptocurrency.
- Melania Trump promoted $MELANIA on social media, unknowingly lending political credibility to the fraudulent coin.
- The lawsuit states Melania Trump and her team were unaware of the fraud and would have withdrawn permission if informed.
The first lady had promoted the coin on her social media on the eve of U.S. President Donald Trump’s inauguration in January.
A federal class-action lawsuit names two men for fraud behind the $MELANIA cryptocurrency
Image credits: Kevin Dietsch/Getty Images
“The Official Melania Meme is live! You can buy $MELANIA now,” she wrote.
The suit names Benjamin Chow, co-founder of the Meteora crypto exchange, and Hayden Davis, co-founder of the venture capital firm Kelsier Labs, as the architects of the alleged scheme.
The complaint states the men used a “repeatable six-step ‘playbook’ for pump-and-dump fraud” to promote at least 15 different memecoins, including $MELANIA and a coin associated with Argentine President Javier Milei.
The suit alleges the duo profited in millions.
Benjamin Chow
Melania is not named as a defendant, but the lawsuit claims that investors interpreted her endorsement as a sign of legitimacy.
“Investors reasonably interpreted the use of Melania Trump’s name and likeness as evidence of legitimacy and due diligence – trusting that no one of her stature would knowingly associate with a fraudulent venture,” the complaint says.
According to the lawsuit, insiders controlled a large portion of the $MELANIA supply before it became available to the public. Once the coin’s price climbed, the insiders sold their holdings, causing its value to collapse.
“Insiders had already cornered the market before a single public buyer could act,” the lawsuit stated.
Hayden Davis
The coin initially surged more than 1,000% but has since fallen from a peak of $7.43 to around nine cents per coin.
Any outsiders who had bought in are now facing considerable losses. “The misuse of Melania Trump’s name magnified the harm,” the lawsuit stated.
“It corrupted public trust and injected an element of political and cultural credibility into what was, in reality, a standard pump-and-dump.”
The lawsuit also clarified that the first lady and her team were unaware of the alleged fraud.
“Melania Trump’s team, to the extent it granted any permission, did so without knowledge of the fraud, the insider rigging, or the deceptive launch mechanics.
“Had they been aware that the project was part of a coordinated criminal scheme, they would have rescinded any consent immediately,” the lawsuit said.
Melania was not named in the lawsuit, but she had promoted the coin on her social media
Image credits: MELANIATRUMP
Chow and Davis are also accused of using their companies to handle both the technical and financial aspects of the coins.
Meteora provided the platform for creating the cryptocurrencies, while Kelsier supplied startup capital and organized promotions.
The companies borrowed credibility from celebrities and public figures by attaching their names to the coin.
The lawsuit explains that they control a network of “sniper” crypto wallets that grab large quantities of the coins at artificially discounted prices, then dump them for regular investors on the market.
Image credits: The White House/Flickr
These crypto wallets had bought almost a third of the entire $MELANIA supply, and later sold off their coins once their price began to climb, earning millions of dollars.
“Going to try to tell all my buddies early,” Wired reported Davis telling an acquaintance in a private conversation prior to the $MELANIA launch. “I’m about to launch the biggest token ever lol.”
The White House has not publicly commented on the lawsuit.
The Trump family has been criticized in the past for their participation in the crypto industry. The Financial Times reported that the Trump family had earned more than $1 billion from its crypto pursuits since Trump was reelected.
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