Memecoin insider traders to face legal reckoning, says crypto VC
Nic Carter says that the memecoin era is basically over and insider traders will soon face legal consequences.
According to Nic Carter, a partner at Castle Island Ventures, the memecoin era has come to an end following a series of scandals, with the most recent one being the $4 billion LIBRA fiasco. He shared his thoughts in a post on X, stating, “Obviously, meme coins won’t fully disappear, but the trade is gone.” Carter also warned that insider trading in the memecoin market won’t go unnoticed and that those who were involved will eventually face legal consequences.
According to Carter, memecoins were originally seen as “fair launch” opportunities where retail investors had the same chance to profit as venture capitalists and funds. However, this premise has now been busted. The Milei coin, Carter explained, is a prime example of this, launching at a billion-dollar valuation and reaching $4 billion within minutes.
“The casino didn’t take a slight edge – it was more like 90/10 in favor of the house.”
Carter pointed to Hayden Davis as a key figure in exposing corruption in the memecoin sector.
“For all of Hayden’s sins, he’s done more to expose the corrupt memecoin sector than anyone else, and he should be commended for that at least.”
While some launches will still occur and retail investors will continue to be exploited, particularly those unaware of the sector’s extractive nature, the broader trend is basically over. The ongoing scandals will drive away smarter investors and eventually deter the mass market.
Beyond market shifts, Carter warned that memecoin insiders will likely face legal consequences.
“Contrary to popular belief, just because memecoins probably aren’t securities, doesn’t mean there’s no liability associated with trading on inside information and so on. Criminal exposure for insider trading is well-established in legal precedent. Expect a spate of enforcement and actions around this. Insiders have left an indelible paper trail on chain and can expect calls from law enforcement over the coming months and years. Insider trading is still illegal, no matter the underlying substrate.”
Carter isn’t alone in believing the meme coin era is winding down. Many market analysts have also noted that the sector is nearing its peak.
Ki Young Ju, CEO of CryptoQuant, said that meme coins will eventually go through a “trough of disillusionment” —where speculation dies down before the market stabilizes. Like Carter, he doesn’t think meme coins will disappear completely. Instead, he expects the sector to mature over the next five years.
