This dynamic creates a moral dilemma. Darrien Justice, community manager for Garlicoin, another joke token, says that he would never recommend anyone buy a meme coin as an investment, including his community’s, for precisely this reason. “Regular investors are absolutely out-liquid, but they don’t fully understand it,” he says. “I don’t want people to lose money buying Garlicoin. Stinks.
Lane dealt with the same problem when CumRocket’s stock skyrocketed. He cashed in enough profit on his own token holdings to allow him to quit his job and cover the expenses of developing a use case, but he was conflicted about the losses he might inflict on others by doing so. “I felt bad shooting. I didn’t want to be greedy,” she says. “When it comes to her own graphic, it’s her baby. I wanted everyone to win.”
The propensity for meme coins to rise rapidly in value also creates fertile ground for scam tokens that take advantage of FOMO. Simply by perpetuating the lore of the meme coin, by engendering a recklessness in investors that stems from the feeling that buying a coin early will bring riches, even harmless projects create a cloud for rug pullers and other scams.
Among the various meme coin investors who spoke to WIRED, most said they try to assess fraud risk before buying a new token. But there is a limit, according to Dyma Budorin, founder of crypto auditing firm Hacken, to the due diligence someone can do with available public tools.
While the underlying code is generally unsophisticated (and therefore easy to check for security flaws or hidden mechanisms to defraud buyers), there is little verified information available on the distribution of meme tokens at launch. . This means that developers could quietly carve out a large batch of their own coin, which they could then sell in large volumes, bringing the price down – a textbook pump and dump.
“The lack of information creates a huge risk for each meme coin; you could be tough at any time,” says Budorin. “The code can be great, with no hidden vulnerabilities, but because there is no tokenomic audit, the token can be resilient.”
The creators, for their part, insist that meme coins play an indispensable role in attracting new faces to cryptocurrencies. The accessible brand, Lane says, creates a path for people who might otherwise feel alienated by the technical learning curve or ideological underpinnings of cryptocurrency. “Not everyone can win, obviously,” she says, “but that’s just nature.”
People more into meme coin trading tend to share the belief that investors don’t need to be pampered, swaddled in cotton. Seth Zaraki, a longtime investor in meme coins, says the unapologetic emphasis on profit over utility is part of what he appreciates most about meme coin culture. It’s a refreshing honesty and a level of modesty not found anywhere else in the industry, he says.
Zaraki says he couldn’t stop laughing when he and his wife bought their first meme coin in 2018.
“PEPE is obviously not designed for low-risk investors,” he says. “Almost everyone who is willing to put money into something like this knows that what they are doing is gambling. They do it simply because it makes them feel good.”
Ace, who was once “played” by a fraudulent project, has a similar opinion. “If as a normal person you are putting more than $50 into a meme token, you are stupid,” he says. “You’re just not cut out for this shit.”