Memecoins on the Solana blockchain are growing rapidly, but they come with significant risks. The niche market is full of risks like “rug pulls,” price manipulation, and secretive trading groups known as “cabals.” These dangerous practices have turned what once seemed like an organic phenomenon into a space controlled by a few insiders, leaving retail investors vulnerable to large losses.
Memecoin Craze and Insider Influence
The memecoin trend on Solana first gained attention with the launch of Bonk Inu in late 2023. The token became a sensation after the collapse of the FTX exchange, as speculators looked for quick profits from the dog-themed coin. Solana emerged from the crisis surrounding FTX, with Bonk Inu marking its success. Over time, Solana became the platform of choice for launching new memecoins, including high-profile tokens linked to figures like Donald Trump, Melania Trump, and Argentine President Javier Milei.
Although Solana was initially celebrated for being faster and cheaper than Ethereum, it has become a breeding ground for covert groups involved in the creation and manipulation of memecoins. These groups control large portions of the market, making it feel like an insider game. Market participants see this as a repeat of past crypto cycles, where insiders secure the best trades while regular investors suffer losses.
Memecoins and the Power of Key Opinion Leaders (KOLs)
Memecoin launches are often backed by key opinion leaders (KOLs) – influencers with massive followings on social media platforms like X. KOLs help gain recognition for memecoins by promoting them to their audiences. However, KOLs often receive deep discounts on tokens before they are made available to the public. Despite claims of a “fair launch,” this is rarely the case, as KOLs and insiders enjoy significant advantages.
One prominent example is Barstool Sports founder Dave Portnoy, who was invited to support the launch of the Libra memecoin. He claimed he was offered coins in exchange for his endorsement but did not accept them. While many influencers engage in these practices, they are often part of secretive groups called “cabals,” which specialize in launching memecoins.
The Cabals Behind Memecoin Launches
Cabals are groups that manipulate the creation, launch, and price movements of memecoins. These groups often involve market makers who help launch tokens, only to dump them later for a quick profit. The process is a familiar pattern in the memecoin market, known as a “pump-and-dump” scheme. These tactics were used during the launch of the Trump memecoin, where certain digital wallets were pre-funded to buy tokens at low prices, only to sell them quickly once the price surged, causing it to crash.
Hayden Davis’ Kelsier Ventures, responsible for the launch of Libra, is one example of a cabal. Other groups, such as the Fantom Troupe and LA Vape Cabal, remain largely anonymous. The strategy involves using bots to “snipe” tokens during a launch, purchasing them at a low cost and selling them to capitalize on short-term price increases.
Sniping and the Role of Platforms
One of the techniques used by these cabals is sniping, where trading bots quickly buy tokens during a launch and sell them for quick profits. This was seen in the Trump memecoin launch, where certain wallets acquired tokens at negligible costs before selling them off, causing prices to plummet shortly after. The rise of platforms like Pump.Fun and Meteora has enabled these practices, allowing groups to launch memecoins quickly and efficiently.
Meteora, in particular, has been behind major launches like Trump, Melania, and Libra. However, the involvement of insiders in these launches has raised concerns. Despite these controversies, the outlook for memecoins does not seem to be waning.
Regulatory Outlook and Future of Memecoins
Despite the growing concerns and insider manipulation, memecoins are still being embraced by some traders. In February 2025, the U.S. Securities and Exchange Commission (SEC) stated that memecoins are not considered securities. The SEC’s decision means that people offering and selling memecoins do not need to register with the agency, and buyers are not protected by federal securities laws. This regulatory stance adds to the sense of risk and uncertainty surrounding the market.
Cathie Wood, CEO of Ark Investment Management, warned that memecoins could face severe price declines. “There will be some fearsome declines in the prices of some of these meme assets,” she said in a Bloomberg interview. “There’s nothing like losing money for people to learn.”
In conclusion, while the Solana memecoin market continues to grow, the risks of insider manipulation and market manipulation remain a significant concern. Retail investors are often left exposed to dramatic price swings, while insiders reap the rewards. As the market continues to evolve, regulators and market participants will need to navigate the dangers and uncertainties that come with the memecoin craze.
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