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Home Technology & Startups

Solana’s Memecoin Cabals Take Shine Off Hottest Crypto Frontier

March 22, 2025
in Technology & Startups
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(Bloomberg) — Rug pulls. Sniping. Trading “cabals.” The niche world of memecoins on the Solana blockchain is rife with danger for those unfamiliar with the machinations that cause token prices to suddenly surge and then crash.

Most Read from Bloomberg

While the memecoin craze centered on the upstart network initially appeared organic during its onset two years ago, its rapid growth – fueled most recently by high-profile newcomers including Donald and Melania Trump, as well as Argentine President Javier Milei – has given rise to a web of covert participants who control a large slice of the now multibillion-dollar corner of the cryptocurrency market. This has made the sector feel like an insider marketplace to many in the industry, with those in the know securing the most lucrative trades and retail investors often bearing the brunt of losses.

The first memecoins were issued just a few years after the birth of cryptocurrencies such as Bitcoin, with developers riffing on popular internet memes as a joke. The breakout memecoin on Solana was Bonk Inu, created after the collapse of the FTX exchange. It was an immediate hit in late 2023 as speculators sought to turn a quick profit on the essentially useless but popular dog-themed token, as Solana emerged from under the cloud that Sam Bankman-Fried’s downfall cast over crypto.

When launching a memecoin today, chances are that it will be on the Solana blockchain, which was touted as being faster and cheaper than the groundbreaking Ethereum network. In reality, Solana has became the preferred choice for everything from the Trump memecoins to the Libra token endorsed by Milei that triggered political controversy, because of the interlocking network of participants behind the creation, launch and sale of the cryptocurrencies, according to market participants who see it as repeat of earlier crypto cycles.

“Memecoin launches were being promoted as an antithesis to the ‘utility’ coins where VC insiders were able to invest at 100 times lower valuations and sell to retail after launch,” said Jordi Alexander, founder of digital-asset trading firm Selini Capital, which makes markets for tokens including memecoins. “In truth, memecoin launches often have as much — if not more — of an insider advantage.”

The risks to those who get in late are easy to see in the memecoin market. The Trump memecoin jumped to a high of almost $74 the day before his inauguration and has since shed about 85% of its value, according to prices on CoinMarketCap. The Melania token is down about $95% from its high. Amid all the high-profile losses, the Solana blockchain’s native token SOL has lost more than half its value since the middle of January.

The most visible participants in the memecoin market are those referred to as key opinion leaders, or KOLs, who are often social-media influencers with huge followings on platforms like X. They are key for gaining recognition amid the sea of hundreds of memecoins being launched daily after platforms like Pump.Fun lowered the technical bar to the create tokens.

KOLs often get to invest in tokens at deep discounts before a project launch in exchange for promoting them to their followers. While memecoins often claim to embrace a “fair launch” model – where all tokens are made available to the public simultaneously – this is rarely the case, according to Mohamed Ezeldin, head of tokenomics at Animoca Brands.

‘Pump and Dump’

Barstool Sports founder Dave Portnoy, who recently embraced memecoin trading, said in an X space on Feb. 16 that he was invited to support the launch of Libra, which included doing an interview with Milei. Portnoy said he was offered Libra coins before the launch in exchange for his support, but said he did not take any coins. Portnoy didn’t respond to a request for comment.

Influencers often connect with creators through what crypto traders call “cabals,” which are groups specializing in launching memecoins. Hayden Davis’ Kelsier Ventures, responsible for the launch of Libra, belongs in this category. These groups often are deeply involved in creating and allegedly manipulating prices of various memecoins to exploit retail investors, according to Joseph Edwards, head of research at Enigma Securities in London.

“There were various market makers who were doing similar things in 2021 — dark pool liquidity,” said Edwards. “They would help these tokens launch and it would be a pump-and-dump every single time.”

Few outsiders knew of Davis until he disclosed his involvement in Libra during an interview with a YouTube journalist known as Coffeezilla. He also claimed to be involved with Melania and Enron memecoins. Other cabals such as the Fantom Troupe and LA Vape Cabal are mostly pseudonymous. Davis didn’t respond to a request for comment.

One of the techniques that’s used by the cabals is called sniping, which is when trading bots are used to buy tokens during a launch and then sell them quickly to capture the normally short-lived price gains. Snipers gained notoriety during the Trump memecoin launch, when certain digital wallets acquired tokens at negligible costs before dumping them shortly after the launch, causing the price to crash. One wallet that acquired the memecoin at launch had been pre-funded just hours before Trump announced its debut on Truth Social, Bloomberg reported previously.

In a leaked audio of a conversation between Moty Povolotski, co-founder of the crypto project DeFiTuna, and Ben Chow, the co-founder of Solana-based decentralized exchange Meteora, Povolotski said he saw Davis and his family sniping Enron. Povolotski told Bloomberg that the audio was real. Chow did not respond to requests for comment.

While Pump.fun is the most popular platform for launching and trading memecoins, Meteora has risen in prominence. Trump, Melania and Libra were all launched through Meteora. Meteora is part of Jupiter, a broader Solana ecosystem that aggregates token trading. Jupiter also owns Moonshot, an app enabling users to buy and sell memecoins via credit cards or Apple Pay. Not long after Libra’s collapse, Meteora’s Chow, who said on the leaked audio that he connected Kelsier Ventures with the Melania token’s team, stepped down.

“With the rise of platforms like Pump.fun, what it’s really allowed people to do is zoom in on those who are only focused on ROI and not focused on fundamentals or utility,” said Animoca Brands’ Ezeldin, referring to return on investment. “They’re just focused on ‘how can I get in as early as possible and how can I exit as close to the top?’ In doing so, we’ve created a zero-sum game.”

‘Fearsome Declines’

Still, the controversy doesn’t seem to be clouding the outlook for memecoins. At the end of February, US Securities and Exchange Commission staff stated that memecoins are not considered securities. The SEC staff compared memecoins to collectibles, noting they have limited or no use or functionality and are often accompanied by statements about their risks and lack of utility. As a result, people who offer and sell memecoins do not need to register with the agency, and buyers are not protected by federal securities laws.

“The message is loud and clear from the regulators,” Ark Investment Management Chief Executive Officer Cathie Wood said in a Bloomberg Television interview. “There will be some fearsome declines in the prices of some of these meme assets. And, you know, there’s nothing like losing money for the people to learn.”

–With assistance from Emily Nicolle and Olga Kharif.

Most Read from Bloomberg Businessweek

©2025 Bloomberg L.P.

Tags: BloombergDave portnoyJavier MileiLaunchingmarket participantsmelania trumpSolana blockchain
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