"Memecoins' Future in Doubt: Crypto VCs Weigh In After LIBRA Scandal"

The Funding: Are memecoins here to stay? Crypto VCs weigh in

The recent LIBRA memecoin scandal has raised serious doubts about the future of memecoins. On Feb. 14, Argentine President Javier Milei promoted LIBRA on his official social media accounts, causing its price to skyrocket. However, the token soon crashed, wiping out 95% of its $4.5 billion valuation and leaving traders with significant losses. Allegations of insider trading and fraud followed, with Milei denying any involvement in the token's creation. The controversy has sparked criminal complaints and calls for his impeachment, adding to concerns over the risks tied to memecoins.

A harsh verdict has been delivered on the fairness of memecoin launches. Nic Carter, founding partner of Castle Island Ventures, called memecoins "cooked" in an X post following the LIBRA scandal. He argued that the incident exposed corruption in the memecoin sector, where token launches often favor insiders over regular investors. While memecoins have always been risky, the sheer scale of the LIBRA collapse appears to have made some traders more cautious.

Some VCs believe legal consequences are inevitable. Dan Matuszewski, co-founder and principal of CMS Holdings, told me, "I think someone's gonna go to jail" over the LIBRA scandal because "it's causing political blowback" — while the rest will likely skate by. With the scandal drawing international attention, the possibility of legal action could add new risks to an already volatile sector.

Memecoins have become increasingly difficult for retail traders to profit from. Jed Breed, founder and general partner of Breed VC and former head of digital assets at Circle, pointed out that memecoins are now an "insiders' game" where contract addresses leak early, snipers jump in and everyday investors are left behind. "It's almost impossible to launch them in a fair way now," he told me, adding that memecoin lifecycles have shortened as insiders cash out within minutes. Lex Sokolin, co-founder and managing partner at Generative Ventures, echoed Breed, calling LIBRA a failure of market structure rather than a failure of memecoins themselves. He argued that strong community-driven memecoins like Dogecoin will survive, but unchecked market manipulation will keep eroding trust.

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