The LIBRA memecoin scandal has raised doubts about the future of memecoins.

On Feb. 14, Argentine President Javier Milei promoted LIBRA on his official social media accounts, sending its price soaring. Soon after, the token crashed, wiping out 95% of its $4.5 billion valuation and leaving traders with heavy losses. Allegations of insider trading and fraud followed, though Milei denied any involvement in the token's creation, saying he had shared the information in good faith. The controversy has sparked criminal complaints and calls for his impeachment, adding to concerns over the risks tied to memecoins.

A harsh verdict has been delivered on the fairness of memecoin launches. Nic Carter, founding partner of Castle Island Ventures, called memecoins "cooked" in an X post following the LIBRA scandal. He said the incident exposed corruption in the memecoin sector, where token launches often favor insiders over regular investors. While memecoins have always been risky, the sheer scale of the LIBRA collapse appears to have made some traders more cautious.

Some VCs believe legal consequences are inevitable. Dan Matuszewski, co-founder and principal of CMS Holdings, told me, "I think someone's gonna go to jail" over the LIBRA scandal because "it's causing political blowback" — while the rest will likely skate by. With the scandal drawing international attention, the possibility of legal action could add new risks to an already volatile sector.

Memecoins have become increasingly difficult for retail traders to profit from. Jed Breed, founder and general partner of Breed VC and former head of digital assets at Circle, pointed out that memecoins are now an "insiders' game" where contract addresses leak early, snipers jump in and everyday investors are left behind. "It's almost impossible to launch them in a fair way now," he told me, adding that memecoin lifecycles have shortened as insiders cash out within minutes. Lex Sokolin, co-founder and managing partner at Generative Ventures, echoed Breed, calling LIBRA a failure of market structure rather than a failure of memecoins themselves. He argued that strong community-driven memecoins like Dogecoin will survive, but unchecked market manipulation will keep eroding trust.

Despite concerns, most VCs don't believe memecoins are going away. Steve Lee, co-founder and managing partner at Neoclassic Capital and a former Goldman Sachs portfolio manager, sees the LIBRA fallout as a "healthy correction" rather than the end. "This event will flush out low-quality projects, easy-money schemes and tokens with weak communities," he said. Rather than killing memecoins, he believes it could push the space to evolve through stronger use cases or more verified tokens.

Memecoins have product-market fit — not because of utility, but because they act as a high-risk, high-reward form of gambling, argued Breed. "People want their 1000x, and memecoins seem like a good path to that," he said. Even as the hype around them fades, he expects the demand for speculative bets to persist. As long as traders chase big wins, memecoins will likely find a way to survive.

That doesn't mean the landscape won't change. Sokolin of Generative Ventures hopes the industry will become more thoughtful about financial products and move beyond zero-sum, casino-style speculation. Breed believes that if a new launch model emerges to make memecoins fairer and less insider-driven, it could extend their lifecycle.

Solana's dominance in memecoins has made it the center of attention —but it could take a hit after the LIBRA scandal. While Matuszewski doesn't think Solana should be blamed reputationally, he noted that if traders keep less SOL on hand due to lower memecoin activity, it could still affect the token's price. Lee agreed that while Solana's association with memecoins might lead to short-term pressure, the blockchain's broader ecosystem strength should keep it resilient.

Still, a warning bell appears to be ringing for Solana. Breed said that if memecoin trading slows, even temporarily, Solana will see less activity. Sokolin criticized Solana's "growth hacking at all costs" approach, suggesting that the blockchain needs to address this issue.

"Solana's technology is strong and has been a big positive in pushing forward scalability and parallelization. However, the cultural adoption of growth hacking at all costs is a profound issue that we should stop tolerating — it encourages fake volumes, fake TVL [total value locked], fake users, etc.," Sokolin, a former executive at Ethereum development studio Consensys, said. "This is a broader crypto issue, but Solana is in the spotlight today due to the choices they've made along the way."

The GMCI Meme Index, which tracks leading memecoins by market capitalization across ecosystems, has fallen over 38% year-to-date (YTD), reflecting a broader decline in the sector. Solana-based memecoins have been hit even harder, with the GMCI Solana Memes Index down over 57% YTD. After last year’s record-breaking gains, memecoins have struggled to sustain momentum in 2025 so far as trader sentiment shifts. GMCI, a crypto indices provider, was launched last year by Wintermute and The Block.

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