Memecoins at a Crossroads: Has the $4B LIBRA Scandal Killed the Hype?

Memecoins that once captivated crypto traders may be losing steam, with Castle Island Ventures partner Nic Carter declaring that the sector is “unquestionably over” following the $4 billion LIBRA scandal.

In a Feb. 19 post on X, Carter didn’t mince words, arguing that the LIBRA debacle, involving Argentine President Javier Milei, has exposed just how corrupt the memecoin space has become. He suggested that while memecoins initially appeared to offer retail investors a fair shot at profits, recent projects have been anything but transparent.

“The casino didn’t take a slight edge—it was more like 90/10 in favor of the house,” Carter wrote, referencing the rampant bot-driven launches and insider cash-outs that have characterized many recent memecoin projects.

He pointed to celebrity-backed tokens, including those linked to Donald Trump and viral influencer Hailey Welch, as further proof that the memecoin market is no longer a playground for fair speculation but rather a breeding ground for pump-and-dump schemes.

However, not everyone agrees that memecoins are doomed.

Memecoins as a “Stress Test” for Blockchain Adoption

Armani Ferrante, the founder of Backpack, believes memecoins still serve a purpose—one that goes beyond gambling and speculation.

In a recent interview, Ferrante said memecoins act as a “stress test” for future financial systems, demonstrating how on-chain assets and transactions can scale globally. “That’s really what memecoins are. They’re an enormous proof-of-concept for real-world finance coming on-chain,” Ferrante explained.

He compared memecoins to the early days of emerging technologies, where innovations often start out looking like “toys” before evolving into something transformative.

“Sooner rather than later, we’ll find ourselves with what we are all hoping and dreaming about—which is all the world’s value moving onchain.”

Even Coinbase CEO Brian Armstrong seems to agree, urging the crypto community to remain “open-minded” about memecoins.

“New technologies often look like a toy but evolve into something much more powerful over time,” Armstrong said, comparing memecoins to the early days of the internet and animated GIFs.

Trading Activity is Already Declining

Despite the debate over their long-term viability, early signs suggest investor enthusiasm for memecoins is cooling.

Data from Dune Analytics shows that new token launches on Solana’s memecoin deployer, Pump.fun, have plummeted 59% in just one month.

On Jan. 23, a record 71,735 tokens were launched on the platform. But by Feb. 19, that number had dropped to just 28,898.