Martin Shkreli Faces Legal Threats Over TrumpCoin Involvement

Investor Martin Shkreli could face legal action if he lied about the involvement of Barron and Donald Trump in the creation of TrumpCoin (DJT), according to The Block.

On June 19, the entrepreneur, who has had legal troubles, confirmed community suspicions that he is behind the meme coin DJT. He claimed that Trump’s son Barron and former kickboxer Andrew Tate assisted him.

In a Space on X, Shkreli, who has served time for securities fraud, stated that his financial interests in the project were “insignificant.” Nevertheless, Shkreli’s involvement has raised questions about potential liability.

Launched on Solana, TrumpCoin caught the community’s attention on June 17 after billionaire Peter Thiel’s associate Mike Solana claimed that the former president approved the project, allegedly led by Barron Trump.

Three days later, the token’s hype began to wane after on-chain sleuth ZachXBT discovered Shkreli’s involvement with DJT. He responded to Arkham Research’s offer of a $150,000 reward for information revealing who is behind TrumpCoin.

The publication noted that many questions remain unanswered, particularly regarding the involvement of Barron and Donald Trump, Andrew Tate, and the nature of Shkreli’s financial incentives. For instance, in an interview with DL News, a Trump insider denied any connection to the project.

What Awaits Shkreli?

Experts consulted by The Block concluded that the entrepreneur faces legal consequences. He could be charged with organizing securities fraud or lying about obtaining approval to use the image of the 45th president.

Currently, it is unknown whether any crimes have actually been committed, the specialists added.

Gabriel Shapiro, founder of MetaLeX, stated that any legal consequences “depend on communications and expectations.” In other words, whether Shkreli had a clear intent to profit.

The question of whether the attempt to monetize attention constitutes a legal violation remains open, although the recent trend of celebrities like Iggy Azalea and Caitlyn Jenner creating meme coins “pushes it towards potential classification under securities law,” Shapiro noted.

According to Adam Cochran, partner at Cinneamhain Ventures, the entrepreneur’s statements, if true, could violate the terms of his parole.

Shkreli’s 3 year parole terms require him to give full financial statements, and to avoid “any self employment involving access to client money or investments” (as well as avoiding other crimes)

So either he goes to jail for fraud, or he managed an investment opportunity on… pic.twitter.com/BkVU33WcQI

— Adam Cochran (adamscochran.eth) (@adamscochran) June 19, 2024

“Shkreli is required […] to avoid any self-employment involving access to client money or investments,” the expert noted.

The publication noted that meme tokens have not yet been the subject of prosecution by the SEC. This potentially gives market participants a certain degree of plausible deniability.

“The fact that Shkreli will face restrictions on his activities after being released from prison is the least of the problems, as he will be engaging in entirely new securities fraud,” commented University of Kentucky law professor Brian Frye.

The expert added that the situation is complicated by unknown circumstances surrounding the asset’s creation. For example, it is unclear whether the entrepreneur bought it and plans to sell it.

Previously, Lookonchain discovered several insider wallets that profited from Trump-related meme tokens. Other researchers warned of a high likelihood of unfair trading of DJT. According to Bubblemaps, 67% of its supply is concentrated in one cluster of addresses.

Sources expressed doubt about the possibility of Shkreli’s activities being approved by Trump’s circle. The latter has publicly expressed disdain for the businessman.

Risks for Trump?

Experts also noted potential political or legal consequences for the Republican presidential candidate.

“SEC staff might start an informal investigation just to ask a few questions and score political points in the process,” said James Murphy, also known as MetaLawMan.

Frye also highlighted the risks for Trump from the SEC. In his view, enforcement actions would be “fraught.”

Ajit Tripathi from Polygon noted that Shkreli allegedly persuaded Barron not to discuss the token launch with lawyers due to the low likelihood of “consequences.”

“He is a notorious fraudster. Shkreli talked about his prison experience without guilt or remorse, as if it was an interesting experience,” the expert added.

Earlier, during a fundraising event for his presidential campaign, Donald Trump declared his intention to become the cryptocurrency president. He presented himself as a defender of digital assets and criticized Democratic initiatives to regulate the industry.