The once-booming memecoin sector has suffered a severe downturn, with the GMCI Meme Index crashing 90% from its December 2024 peak. Leading memecoins, including Dogecoin (DOGE), Shiba Inu (SHIB), Pepe (PEPE), and Trump (TRUMP) tokens, have faced intense selling pressure as traders shift focus away from these high-risk assets.
Memecoin Market Collapse and the ‘Libragate’ Scandal
The recent collapse of Libra (LIBRA), a memecoin linked to Argentine President Javier Milei, has fueled a broader market selloff. The token plummeted 94% within hours of launch, with insiders reportedly cashing out $107 million before retail investors could react. Dubbed ‘Libragate,’ this event shattered trust in memecoin fairness and exposed coordinated pre-launch deals.
The memecoin slowdown has hit Solana particularly hard. Once a hub for memecoin activity, Solana’s weekly revenue has fallen 93%, from a peak of $55.3 million in January to just $4 million in March. The total value locked in Solana’s DeFi ecosystem has also collapsed from over $12 billion to $6.5 billion. Pump.fun, which drove much of Solana’s speculative boom, has seen daily revenue fall from $15 million to around $1 million reflecting waning trader interest.
Regulatory Clarity: SEC Confirms Memecoins Are Not Securities
The U.S. Securities and Exchange Commission has confirmed that memecoins do not meet the legal definition of securities, lifting compliance obligations for issuers and traders. However, the agency warned that deceptive projects could still face enforcement if they engage in fraud or misleading marketing.
This decision aligns with the SEC’s evolving stance under its new leadership, which has recently dropped cases against Coinbase, Uniswap, and Kraken. While this ruling provides some regulatory relief, it does little to restore confidence in a market shaken by insider cashouts and failed projects.
