Trump’s Memecoin Initiative: $20 Million Reserve Established by Company
A publicly traded logistics firm has secured a $20 million deal with an institutional investor to acquire Official Trump memecoins, establishing itself as one of the first companies to build its digital asset strategy around the controversial crypto initiative of the former U.S. president.
Freight Technologies CEO Javier Selgas presented the acquisition as a way to improve trade relations between the U.S. and Mexico, although the relevance of a memecoin in the logistics sector is still up for debate. This investment comes amidst scrutiny from the U.S. Office of Government Ethics regarding concerns that President Donald Trump’s provision of exclusive opportunities for significant investors in his coin may violate federal ethics standards.
What Is Fr8Tech?
Freight Technologies, known as Fr8Tech, is a firm based in Houston, founded in 2015 and listed on NASDAQ. The company aims to utilize innovative technologies, including artificial intelligence, to enhance supply chain efficiency.
The company’s stock, trading on NASDAQ under the ticker FRGT, saw a major drop in 2018 during Trump’s first term. Following a pattern observed in several companies, Freight Technologies is now expanding its digital asset portfolio by choosing a memecoin instead of the traditional Bitcoin (BTC).
Crypto commentator Mario Nawfal praised it as the “first-ever” Trump treasury.
Costly Gimmick?
On April 30, Freight Technologies announced its plan for a cryptocurrency treasury.
The firm agreed to issue convertible notes of up to $20 million with an institutional investor, exclusively for the purpose of acquiring Official Trump (TRUMP) tokens. The initial investment will be $1 million.
Selgas, in a formal statement, referenced Trump’s “America First” policy, connecting it to trade endeavors between the U.S. and Mexico:
Fr8Tech is devoted to enhancing active trade between the United States and Mexico. Mexico stands as the top trading partner for the United States, being the leading destination for U.S. exports and the primary source for imports. U.S. Treasury Secretary Scott Bessent recently clarified, “I want to emphasize: America First does not mean America alone. It highlights deeper collaboration and mutual respect among trade partners.”
The acquisition of TRUMP is framed as “a positive way to encourage fair and unrestricted trade between Mexico and the U.S.” Nevertheless, the company has not articulated how acquiring Trump memecoins will aid in trade or warned readers of potential risks.
Unfortunately, similar to many memecoins, the Trump token is recognized for its volatility. Though there has been a slight increase in its value of about 2% in the past 24 hours, it has generally trended downward since its inception in January.
Trump Memecoin: An Unconventional Choice
As corporate crypto treasuries gain popularity, respected firms such as BlackRock recommend investing up to 2% of corporate funds in Bitcoin, positioning BTC as a superior store of value compared to other digital currencies.
Data from the Bitcoin Treasuries website reveals that 101 public entities hold Bitcoin.
Given Bitcoin’s deflationary characteristics and its historically proven long-term value appreciation over the past 15 years, it’s understandable that certain companies prefer Bitcoin for their corporate assets.
Currently, Official Trump offers no practical use case aside from incentivizing investors to purchase more for a chance to attend a private dinner with Trump on May 22. Following this promotion, the value of $TRUMP skyrocketed by over 50%.
Critics warn that the “pay to play” aspect of Official Trump raises ethical concerns and could function as a potential bribery tool.
“One issue that hasn’t been widely discussed—creating various personal memecoins opens avenues for secretive foreign buyers seeking to influence our leaders,” Nic Carter from Castle Island Ventures noted on X in January. “If you opposed Hunter Biden’s undisclosed art sales, you should similarly oppose this.”
Recently, Democratic Senators Adam Schiff and Elizabeth Warren have requested a federal ethics investigation into Trump’s promotion of the coin. In a letter to the U.S. Office of Government Ethics, the senators argue that Trump may have breached federal ethics regulations by granting preferential access to his administration in return for financial backing.
Freight Technologies has not indicated any plans to seek White House access through the possession of Trump memecoins. Following the announcement, the FRGT stock price surged by 111.21% on May 2, finishing at $2.08 per share.
In contrast, the value of the Trump memecoin seems to remain steady despite the announcement.
Signs of a Bubble?
Bubbles typically reveal themselves upon bursting, suggesting it is too early to declare that corporate crypto treasuries constitute a bubble. However, some industry insiders compare the recent spike in crypto interest among public companies to the dot-com bubble.
A further analysis suggests that it’s premature to declare a substantial trend or noteworthy crypto excitement among public companies. While numerous firms are investing in Bitcoin, many of them are relatively small businesses making minor investments.
Strategy, which holds over 500,000 bitcoins, began accumulating BTC in 2020, whereas Tesla’s investment came in 2021 and had a notable impact on the asset’s value. Strategy has emerged as the leading Bitcoin buyer among public companies, while others maintain smaller BTC holdings that don’t warrant concern.
In terms of Fr8Tech’s development, the firm currently has funds “earmarked” for acquiring Official Trump, leaving the success of this purchase uncertain. Additionally, it is not the only token that has piqued the company’s interest.
Earlier in April, Fr8Tech disclosed the acquisition of $5.2 million in FET Tokens from Fetch Compute, Inc., in exchange for over 2.3 million shares.