SEC exempts meme tokens from securities laws, Hunter Biden’s LAPTOP crashes 95%

Investors who suffered losses during the dramatic crash of the Hunter Biden LAPTOP meme token are unlikely to find recourse with US securities regulators. The Securities and Exchange Commission (SEC), under leadership appointed by Donald Trump, clarified in a February 2025 staff statement that meme tokens are not classified as securities, leaving traders unprotected under federal securities law.

Severe losses as LAPTOP token collapses

The LAPTOP token, launched on Coinbase’s Base blockchain, saw its price plummet 95% within the first 30 minutes of trading, according to blockchain analytics platform Arkham. At its launch, Arkham estimated LAPTOP’s fully diluted valuation at $144 billion just two minutes in. That figure dwindled to $5 billion within half an hour as trading volumes surged and prices collapsed.

Bubblemaps, a firm specializing in tracking risky token launches, described the event as a “bloodbath.” Analysis from Lookonchain highlighted one wallet that purchased tokens for $200,000 near $218 each, only to see the value fall to $3,000 shortly thereafter.

LAPTOP was trading at about $0.79 by early Thursday, reflecting the scale of investor losses soon after launch.

Despite the swift downturn, the LAPTOP team denied the collapse was due to a typical fraudulent scheme and pointed to aggressive automated trading bots and inadequate initial liquidity. The team stated on Medium that it planned to send four million tokens to Aerodrome pools to support liquidity and projected a 1% reduction in circulating supply during the first week through two prediction event burns totaling ten million tokens.

Hunter Biden, whose connection to the meme token was the theme of the launch, made it clear in launch communications that he did not offer any ownership, profit-sharing, or promise to increase the token’s value, with an explicit warning to investors not to expect support.

Regulatory position and legal caveats

The SEC’s Division of Corporation Finance confirmed in February 2025 that meme tokens do not meet the “profit from the efforts of others” standard defined by the Howey test for securities. The staff statement clarified, “Neither meme coin purchasers nor holders are protected by the federal securities laws.”

Legal analysis, including publications on the Harvard and Columbia corporate governance blogs, emphasized that tokens marketed as memes may still be assessed on the economic realities of their function. While federal securities protections are absent, fraudulent activities involving meme tokens remain subject to enforcement by the Department of Justice, the Commodity Futures Trading Commission (CFTC), and state regulators.

SEC Commissioner Caroline Crenshaw voiced dissent, arguing the carve-out for memecoins could serve as a loophole. However, the practical effect is that the SEC no longer serves as chief regulator for these tokens, including the troubled LAPTOP launch.

The clarification on meme token regulation was issued after the start of Donald Trump’s presidency and aligns with high-profile launches such as the TRUMP and MELANIA memecoins. According to Better Markets, the TRUMP token saw 800,000 wallets experience over $2 billion in losses and fell by 55% within minutes of MELANIA token’s debut.

The interpretation now protecting the LAPTOP launch also shielded earlier meme coins related to the Trump family from federal securities registration requirements.

The SEC’s position represents a significant shift for investors: while the agency does not oversee meme tokens, other regulators can intervene if economic realities indicate additional risks or fraud.

Mini dictionary: Howey test, the US legal standard determining if a transaction qualifies as an investment contract subject to securities laws. The test evaluates whether there is an investment of money in a common enterprise with an expectation of profits derived from the efforts of others.