Today, CoinMarketCap dives into crypto's latest craze - celebrity memecoins.
Last week saw the unsurprising return of one of the most nerve-inducing trends for cryptocurrency holders, also known as the Celebrity Crypto Tokens.
Experienced crypto traders get jittery and a jolt of PTSD when famous or almost famous individuals re-enter the space, full of hot air promises and a token address. As history has shown, this often signals that markets are overheated. In short, it can be a “top” signal, just like memecoin pumps.
Therefore, it makes total sense that the Celeb Crypto Class of 2024 comes with an added mutation: the celebrity memecoin.
The latest craze kicked off in late May 2024 and has seen celebrities like Caitlyn Jenner and Iggy Azalea create their own digital tokens, riding the wave of Solana-based memecoin mania driven by the politics-themed Doland Tremp and Jeo Boden tokens. Thanks to the exploding Pump.fun platform, which makes issuing a new memecoin super easy, thousands of them are being pushed out on a daily basis now, mostly by scammers, with nearly all of them skyrocketing for a few hours before crashing or just plain-old-fashioned rug pulling minutes after launch.
The big difference with the latest wave of celebrity tokens now though is that they have the support of the personality they’re named after. Or do they?
Of course, it’s a different market for memecoins this year than during the rise of Doge and Shibu. Memecoin degeneracy is not a transient thing anymore, and with most legitimate cryptocurrency projects already at very high fully diluted values (FDVs) in the billions of dollars, these coins represent the last opportunity for retail investors to strike it big and make those millions.
Will celebrity endorsements take memecoins to the next level on the crypto hierarchy, and how much of a risk do they pose to investors and the industry? Let’s take a closer look.
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How It Started
$Jenner and $Mother Take Off
Media personality Caitlyn Jenner made headlines in late May 2024 with the launch of her JENNER token on the Solana blockchain. It quickly reached a market cap of over $40 million, fueled by social media buzz and speculation surrounding Jenner's involvement.
Not to be outdone, rapper Iggy Azalea followed suit with the launch of her MOTHER token, also on the Solana network, which has skyrocketed in value after a very controversial start.
The celebrity memecoin mania now extends beyond Jenner and Azalea. Nigerian singer Davido also jumped on the bandwagon with the launch of his DAVIDO token. However, critics have alleged that the project involved a pre-mine and token dump, raising concerns about its legitimacy. Other minor celebrities, such as rapper Soulja Boy, have also released their own tokens amidst the growing hype.
The Sahil Arora Connection
Operating in the shadows and driving these high-profile token launches appeared to be Sahil Arora, a controversial young Indian entrepreneur known for flaunting his extensive celebrity network which he would pay up to $300,000 for endorsements. He’s been accused of orchestrating celebrity meme token launches which all rugpulled soon after. Arora has a history of allegations dating back to 2017 in India, with claims of impropriety and scams surrounding his ventures.
Both Jenner and Azalea have stated on social media that Arora "scammed" them, accusations which he denies.
The scams apparently involved Arora acting as a middleman, launching tokens on behalf of celebrities, with or without their knowledge sometimes, then encouraging them to promote the tokens, or taking over their X.com profiles to shill them, and then dumping his own holdings to withdraw liquidity, causing the price to plummet.
Arora allegedly posted fake screenshots implying his involvement with the launch of IGGY, a meme coin inspired by Australian rapper Iggy Azalea. The rapper later responded to the claims and launched her own token, MOTHER, on the Solana blockchain, which she claimed “is for baddies”. Azalea has since attracted a lot of flak for apparently sniping tokens very early at the launch, then sending them to several wallets and dumping them on new buyers. However, “Mother” isn’t really that bothered by the fuss.
Similarly, American rapper Rich the Kid claimed on X that his account was "hacked" to promote a coin "by Sahil," who then allegedly "made a pump and dump and dumped all the money to his account" before blocking the celebrities he allegedly scammed. As a result of these accusations, Arora has been banned from X.
How It’s Going
The JENNER token hit a market cap of $43 million within hours of its launch but subsequently fell sharply, with its market cap dropping to around $6 million at the time of writing. Caitlyn Jenner took to X to accuse Arora of scamming her.
However, $MOTHER has been skyrocketing since, due to Azalea’s relentless promotion of the token and probably just general Solana memecoin trader degeneracy. It has a current market cap of $188 million and has unleashed a torrent of copy projects in its wake.
Celebrity Memecoins: The Bad
Celebrity memecoins are as speculative an investment as they come. They usually have little to no fundamental value or utility, relying heavily on short-term hype cycles and social media promotion rather than building real products or services. This lack of substance puts investors, particularly inexperienced retail buyers, at risk of falling victim to FOMO (fear of missing out) and suffering substantial financial losses.
Moreover, the prevalence of "rug pulls," where liquidity is suddenly removed from a project, is considered almost as par for the course now for the memecoin sector. It leaves token holders with worthless assets, thereby not only harming individual investors but also damaging the overall perception of the cryptocurrency industry even further, painting it as a landscape riddled with scams and money grabs.
The crypto sector has been struggling to entice mainstream retail entrants back to the space following the 2022 bear market and FTX and Luna calamities, and this perception isn’t helping.
While they take time to build a case, it’s nearly inevitable that regulators such as the SEC will eventually get involved. Celebrities who promote these tokens may face consequences for violating securities laws, as seen in previous cases involving Kim Kardashian, Floyd Mayweather, Tom Brady and even Larry David. And of course, poor Ashton and Mila’s Stoner Cats.
Celebrity Tokens: The Good
Despite the numerous drawbacks, many argue that celebrity involvement in the crypto space could have positive effects if done right. The endorsement and engagement of high-profile figures can bring mainstream attention and adoption to cryptocurrencies, making them more accessible and widely understood by the general public.
Moreover, if executed properly, celebrity tokens have the potential to evolve into legitimate fan engagement tools or integrate with existing, reputable projects. Famed investor Raoul Pal believes that social tokens will eventually be an integral part of crypto, serving as a much-needed conduit to bring in millions of new mainstream users who want to get closer to their idols. Celebrity memecoins could serve as a SocialFi petri dish to experiment and iterate on.
Vitalik Buterin's Criticism and Criteria for Legitimacy
Ethereum co-founder Vitalik Buterin has also chimed in about the celebrity memecoin phenomenon. He argued in a post on X that these tokens lack real purpose beyond enriching their founders and early investors.
Buterin emphasizes the importance of long-term sustainability, advocating for projects that can maintain a vibrant community over a span of 10 years or more, rather than those that rely on short-lived hype cycles. He believes that participants should feel satisfied with their involvement in a project, even if the tokens eventually lose their monetary value.
To be considered legitimate, Buterin suggests that celebrity tokens should adhere to the following criteria:
- Have a clear public benefit beyond generating profits, such as art or charity
- Offer fun features and utility beyond mere trading that gives participants some satisfaction
- Foster a sustainable project and community with long-term viability in excess of a decade
Conclusion
The celebrity memecoin frenzy of 2024 has come at an opportune time for a crypto sector bored by months of sideways price action, and generated significant hype and trading volume in the short term making meme trading even more fun.
However, the trend's impact on the cryptocurrency industry's maturation and mainstream adoption remains questionable. The involvement of alleged scammers like Sahil Arora and the prevalence of "pump and dump" trading dynamics raise serious red flags about the legitimacy and long-term viability of these projects and the harm they do by chasing away new investors, either through losses or simply bad press.
While celebrity attention may have the potential to bring positive exposure to the crypto space in the long run, projects must prioritize solid fundamentals and real staying power to establish a legitimate place within the ecosystem.
It’s encouraging to see industry leaders like Vitalik Buterin pushing for a higher standard, emphasizing the need for social good and sustainability in celebrity-backed tokens to prevent them from devolving into mere money grabs that exploit investors once again.
Web3 and its decentralized social media protocols should eventually evolve to the point where they bring celebrities and their followers together as tribes of a sort, where everyone will share collectively in the generated revenue and benefits that type of pooled attention yields. By that time celeb tokens that come from that union will barely raise an eyebrow.
