This dynamic creates a moral quandary. Darrien Justice, community manager for Garlicoin, another joke token, says he would never recommend anyone purchase a meme coin as an investment—including his community’s own—for precisely this reason. “The regular investors are absolutely the exit liquidity, but they don’t quite understand that,” he says. “I don’t want people to lose money buying Garlicoin. It sucks.”
Lane grappled with the same issue when the value of CumRocket soared. She cashed in enough of the profits on her own token holdings to allow her to quit her job and cover the expenses of developing a use case, but she felt conflicted about the losses she might inflict on others in doing so. “I felt bad dumping. I didn’t want to be greedy,” she says. “When it’s your own chart, it’s your baby. I wanted everyone to win.”
The propensity for meme coins to increase rapidly in value also creates fertile ground for scam tokens that prey on FOMO. Simply by perpetuating the meme coin tradition—by breeding a recklessness in investors that comes from a sense that buying into a coin early will lead to riches—even harmless projects create cloud cover for rug pulls and other scams.
Among the several meme coin investors who spoke to WIRED, most said they make some attempt to assess the risk of fraud before buying into a new token. But there’s a limit, according to Dyma Budorin, founder of crypto auditing firm Hacken, to the due diligence someone can do with the public tools available.
While the underlying code is generally unsophisticated (and therefore easy to check for security flaws or hidden mechanisms for defrauding buyers), little verified information is available on the distribution of meme tokens at launch. This means developers could quietly award themselves a large batch of their own coin, which they could later sell in large volumes, tanking the price—a textbook pump-and-dump.
“The lack of information creates a huge risk for every meme coin; you could be rugged at any second,” says Budorin. “The code can be fantastic, without any hidden vulnerabilities, but because there is no tokenomics audit, the token can be rugged.”
The creators, for their part, insist that meme coins play an indispensable role by attracting new faces to crypto. The accessible branding, says Lane, creates a route in for people who might otherwise be alienated by the technical learning curve or crypto’s ideological groundings. “Not everyone can win, obviously,” she says, “but that’s the nature of it.”
The people most deeply steeped in meme coin trading tend to share the belief that investors don’t need to be coddled, wrapped in cotton wool. Seth Zaraki, a longtime investor in meme coins, says the unapologetic emphasis on profit over utility is part of what he cherishes most about meme coin culture. It’s a refreshing honesty and level of self-effacement not found elsewhere in the sector, he says.
Zaraki says he couldn’t stop laughing when he and his wife purchased their first meme coin back in 2018.
“PEPE is obviously not designed for low-risk investors,” he says. “Pretty much everyone willing to put money into something like this knows what they’re doing is gambling. They’re doing it simply because it makes them feel good.”
Ace, who himself was once “played” by a fraudulent project, takes a similar view. “If as a regular person you’re putting more than $50 into a meme token, you’re stupid,” he says. “You’re just not cut out for this shit.”
GIPHY App Key not set. Please check settings