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? President Donald Trump launched his memecoin $TRUMP days before his inauguration. If affiliates of the Trump Organization, which owns 80% of the coin, suddenly sell their shares, it would pad the president’s pockets at the expense of investors, finance professor Leonard Kostovetsky told Fortune.

President Donald Trump’s launch of his memecoin $TRUMP last week made him a crypto billionaire nearly overnight. But should CIC Digital, an affiliate of the Trump Organization, and CIC co-owned Fight Fight Fight LLC decide to sell their 80% stake in the token, it would skyrocket Trump’s wealth—and pull the rug out from investors, one finance expert said.

Trump launched his own memecoin on Jan. 17, and within days of his inauguration the value of the coin rallied from less than $10 to as high as $74.59, with a market capitalization nearing $15 billion. Though the value has since come down to earth—its share price has halved to around $39—if the Trump Organization’s affiliates were to sell their shares of the coin, Trump’s wealth could effectively quadruple, according to Leonard Kostovetsky, associate professor of finance at Baruch College’s Zicklin School of Business.

The Trump Organization, the entity under which the family conducts business, released an ethics agreement preventing Trump from participating in “day-to-day” business activities during his presidency.

The president’s effective stake in the coin has raised concerns about conflicts of interest and the legitimacy of cryptocurrency Trump promised to reinforce during his second term. But chief among the worries is what the Trump Organization’s predominant ownership would mean for investors if Trump were to suddenly cash out on the memecoin.

“In terms of investors, of course there’s a huge red flag,” Kostovetsky told Fortune. “All of these memecoins don’t really have any value beyond just what other people are willing to pay for them. They’re pure bubbles.”

The Trump Organization has already seen this happening in real time. Two days after launching $TRUMP, Trump introduced the first lady’s memecoin $MELANIA. Trump’s token plunged to about $40 a share shortly after.

The Trump-Vance transition team did not immediately respond to Fortune’s request for comment.

The risk of a rug pull

Kostovetsky said the fact the Trump Organization was willing to introduce memecoins of other family members—despite the near-immediate nosedive of the token’s share prices—indicates the possibility of a rug pull, or a willingness to inflate the value of a token in order to sell shares and profit, often as the expense of other investors.

“There’s already some idea that they’re going to want to monetize this,” Kostovetsky said. “They’re going to want to, as quickly as possible, get as much money out of this as possible, rather than kind of slow play it and allow, for investors, the coins to be able to absorb the liquidity from any new coins coming on.”

Insiders and major stakeholders are the ones who benefit from these rug pulls. Last month, viral TikTok star Hailey Welch, also known as the “Hawk Tuah girl,” launched a memecoin that peaked at nearly $500 million, only to collapse 95% a week later. A small group of insiders pocketed $3 million from the spike, while retail investors got squeezed.

Promoters of these unregulated tokens risk entering muddy legal waters. In October 2022, Kim Kardashian paid the Securities and Exchange Commission $1.26 million to settle charges alleging she promoted the cryptocurrency on social media without disclosing how much she was paid to do so. A lawsuit alleged Kardashian’s and other celebrities’ promotion of the token inflated its value as part of a “pump and dump” scheme to inflate its share price before investors sold it.

Avoiding embarrassment

There’s good reason for Trump to avoid a similar pump-and-dump situation, Kostovestsky suggested. The president’s predominant risk in memecoin ownership is not financial, but rather reputational. If Trump’s token crashes, it’s a bad look.

The performance of Trump’s memecoins are a quantitative measure of followers’ confidence in the president. The Trump memecoin website says scooping up $TRUMP shares is a means of showing support for the president and is not an investment opportunity. If the value of $TRUMP were to further collapse as a result of a massive sell-off, it could reflect poorly on broader confidence in Trump’s term.

“Given how he’s very sensitive to anything that pertains to his performance or his wealth,” Kostovetsky said, “it could potentially be embarrassing for him.”

The legitimacy of crypto

The sudden sell-off of Trump’s memecoin will also have repercussions on the crypto community. On the campaign trail, Trump promised to make the U.S. the “crypto capital of the world” and create a “strategic reserve” of Bitcoin currently held by the government.

Trump’s hefty ownership of his own memecoin may sour the relationship with crypto proponents. If Trump were to sell his stake in his memecoin, subsequently gaining billions of dollars, it would provide evidence that crypto is a scam.

“Generally, the introduction of any meme coin ruffles the feathers of those who are serious about the use, legitimacy and security of crypto,” Kyla Curley, partner at business management consultancy StoneTurn, told CNN. However, Trump’s stake in memecoins isn’t mutually exclusive with his desire to regulate crypto, she said.

Conversely, a proliferation of memecoins produced for the purpose of showing support of Trump would be good news for the president if it introduced more of his followers to crypto, Kostovetsky said.

“The majority of conventional wisdom in the crypto community is that it’s not great, but could be worse,” he said.