SEC Commissioner Hester Peirce Advises Caution to Memecoin Traders

• Memecoin traders must self-manage risk.
• Don't expect SEC intervention in losses.
• Individual responsibility is crucial in investing.

Hester Peirce, an influential member of the U.S. Securities and Exchange Commission (SEC) and known for her pro-crypto stance, issued a clear warning to memecoin enthusiasts in a recent appearance on the Bankless podcast. With the creation of the SEC’s new cryptocurrency task force, Peirce stressed that not all forms of crypto assets will be protected or regulated by the federal agency.

The commissioner emphasized the importance of self-management of risk, noting that investors should not expect a government bailout in the event of significant losses. “Just because something is out there and it’s popular doesn’t mean it’s going to fall under the SEC’s jurisdiction. So I would just caution people not to assume that there’s going to be regulatory support from the SEC for everything,” Peirce said.

She went on to defend individual investment freedom, but with a cautionary note: “I’m a big believer that people have the freedom to use their money however they want. But you shouldn’t assume that there’s going to be a government agency there to set the rules for that or, at the end of the day, when the price of something goes down, to make you whole. That’s just not something you should expect.”

Additionally, Peirce advised that memecoin traders should take full responsibility for their financial choices. She also extended this advice to institutions involved in creating new products or services. “Just because you get big and you’re doing something that has a big footprint doesn’t mean the government is going to come in and bail you out when you’re getting ready to go bankrupt, right?”

In conclusion, the commissioner reflected on the essence of individual responsibility: “So I think if we really want to live in a place where people have choices, we have to accept the responsibility that comes with those choices. People have fun with memecoins and all sorts of other things and that’s completely fine, but don’t assume that there’s an SEC regulatory presence there. There may be, again, facts and circumstances matter, but don’t assume that.”

Milei and the $LIBRA Chaos: A Warning About Investing in Memecoins

Argentine President Javier Milei has recently been embroiled in a controversy that has sparked debates about the security and stability of emerging cryptocurrencies, especially so-called memecoins. The controversy began with the announcement on his social media of a new cryptocurrency, $LIBRA, which was launched moments before its promotion on Twitter.

Within minutes of Milei’s announcement, $LIBRA experienced an exponential appreciation, jumping from $0,25 to $5,54. However, the spike was brief, and the value plummeted to $0,96 within hours, resulting in huge losses for many investors.

Hayden Mark Davis, an American entrepreneur and one of the names behind $LIBRA, defended the project by stating that it was developed in partnership with the Argentine government. On the other hand, investors affected by the rapid devaluation are seeking redress through legal proceedings, while the government has launched investigations into the controversial circumstances surrounding the creation and promotion of the cryptocurrency.

Data engineer Fernando Molina, in collaboration with the newspaper “La Nación”, reported that $LIBRA was launched on the Solana platform at 18:37 pm on the Friday in question. However, there were no transactions until Milei announced the cryptocurrency as part of a new project to support small businesses in Argentina, which occurred at 19:01 pm.

The immediate consequence of the announcement was a massive purchase of $LIBRA, presumably by bots programmed to buy as soon as the tweet was published. This suggests that some investors had inside information about Milei’s announcement, allowing them to capitalize on the cryptocurrency’s sudden surge in value.

The incident characterizes a scam known as a “rug pull,” where developers sell a large amount of the digital asset after an artificial increase in its price. This was evidenced by the rapid sale of $LIBRA shares by its own creators, resulting in a sharp drop in its value.