Rug pulls. Sniping. Trading “cabals.” The niche world of memecoins on the Solana blockchain is rife with danger for those unfamiliar with the machinations that cause token prices to suddenly surge and then crash.

While the memecoin craze centered on the upstart network initially appeared organic during its onset two years ago, its rapid growth – fueled most recently by high-profile newcomers including Donald and Melania Trump, as well as Argentine President Javier Milei – has given rise to a web of covert participants who control a large slice of the now multibillion-dollar corner of the cryptocurrency market. This has made the sector feel like an insider marketplace to many in the industry, with those in the know securing the most lucrative trades and retail investors often bearing the brunt of losses.

The first memecoins were issued just a few years after the birth of cryptocurrencies such as Bitcoin, with developers riffing on popular internet memes as a joke. The breakout memecoin on Solana was Bonk Inu, created after the collapse of the FTX exchange. It was an immediate hit in late 2023 as speculators sought to turn a quick profit on the essentially useless but popular dog-themed token, as Solana emerged from under the cloud that Sam Bankman-Fried’s downfall cast over crypto.

When launching a memecoin today, chances are that it will be on the Solana blockchain, which was touted as being faster and cheaper than the groundbreaking Ethereum network. In reality, Solana has become the preferred choice for everything from the Trump memecoins to the Libra token endorsed by Milei that triggered political controversy, because of the interlocking network of participants behind the creation, launch and sale of the cryptocurrencies, according to market participants who see it as a repeat of earlier crypto cycles.

“Memecoin launches were being promoted as an antithesis to the ‘utility’ coins where VC insiders were able to invest at 100 times lower valuations and sell to retail after launch,” said Jordi Alexander, founder of digital-asset trading firm Selini Capital, which makes markets for tokens including memecoins. “In truth, memecoin launches often have as much — if not more — of an insider advantage.”

The risks to those who get in late are easy to see in the memecoin market. The Trump memecoin jumped to a high of almost $74 the day before his inauguration and has since shed about 85% of its value, according to prices on CoinMarketCap. The Melania token is down about $95% from its high. Amid all the high-profile losses, the Solana blockchain’s native token SOL has lost more than half its value since the middle of January.

The most visible participants in the memecoin market are those referred to as key opinion leaders, or KOLs, who are often social-media influencers with huge followings on platforms like X. They are key for gaining recognition amid the sea of hundreds of memecoins being launched daily after platforms like Pump.Fun lowered the technical bar to create tokens.

KOLs often get to invest in tokens at deep discounts before a project launch in exchange for promoting them to their followers. While memecoins often claim to embrace a “fair launch” model – where all tokens are made available to the public simultaneously – this is rarely the case, according to Mohamed Ezeldin, head of tokenomics at Animoca Brands.

Barstool Sports founder Dave Portnoy, who recently embraced memecoin trading, said in an X space on Feb. 16 that he was invited to support the launch of Libra, which included doing an interview with Milei. Portnoy said he was offered Libra coins before the launch in exchange for his support, but said he did not take any coins. Portnoy didn’t respond to a request for comment.

Influencers often connect with creators through what crypto traders call “cabals,” which are groups specializing in launching memecoins. Hayden Davis’ Kelsier Ventures, responsible for the launch of Libra, belongs in this category. These groups are often deeply involved in creating and allegedly manipulating prices of various memecoins to exploit retail investors, according to Joseph Edwards, head of research at Enigma Securities in London.

“There were various market makers who were doing similar things in 2021 — dark pool liquidity,” said Edwards. “They would help these tokens launch and it would be a pump-and-dump every single time.”

Few outsiders knew of Davis until he disclosed his involvement in Libra during an interview with a YouTube journalist known as Coffeezilla. He also claimed to be involved with Melania and Enron memecoins. Other cabals such as the Fantom Troupe and LA Vape Cabal are mostly pseudonymous. Davis didn’t respond to a request for comment.

One of the techniques that’s used by the cabals is called sniping, which is when trading bots are used to buy tokens during a launch and then sell them quickly to capture the normally short-lived price gains. Snipers gained notoriety during the Trump memecoin launch, when certain digital wallets acquired tokens at negligible costs before dumping them shortly