A digital coin based on baby Trump? Yup.

Josh Bailey, a 26-year-old day trader in Austin, Texas, was scrolling through a cryptocurrency group chat last month when he encountered an investment opportunity: a digital currency created in honor of a dog named Billy.

The dog was cute, he thought, but more important, its name evoked something every crypto trader covets — billionaire status. “I started hearing people say ‘Billy’ to a billy,” Bailey said. “Kind of has that ring to it.”

Bailey bought about $900 of $BILLY on Pump.fun, a leading vendor for memecoins, volatile cryptocurrencies based on the fluctuating popularity of internet memes. When he sold his $BILLY holdings a few days later, he made a profit of more than $100,000.

The recent revival of the crypto market has fueled a surge in memecoins, one of the industry’s frothiest, most scam-ridden segments. In the first six months of the year, nearly 1.7 million new coins entered circulation, compared with 264,000 over the same period in 2023, according to Dune Analytics, a crypto data tracker. Many of the tokens have names such as Bread (yes, the meme is a loaf of bread) or Baby Trump (the former president in a diaper). One of the most popular memecoins is based on Pepe the Frog, an alt-right mascot that is sometimes used as a hate symbol.

Much of the activity has been driven by Pump.fun, a website that started in January and offers a quick and easy method for spinning up new memecoins. The site generated about $60 million in transaction fees over the first half of the year, according to an estimate by Subin An, an analyst at crypto venture firm Hashed. But little is known about its operations or its founders, who conduct business under pseudonyms.

The frenzy reveals a side of the crypto world that industry executives rarely mention these days. Seeking to put a series of damaging financial scandals behind it, the crypto industry now markets itself as a newly mature institution, with a growing foothold in the traditional financial sector and a campaign war chest to influence elections. Crypto lobbyists hobnob with politicians in Washington and have petitioned for looser regulations.

But the crypto world hasn’t outgrown some of the risky practices that flourished when digital currencies boomed in 2020 and 2021, before a market crash sent major companies into bankruptcy and drained the savings of millions of investors.

“It’s play at your own risk,” said Eric Spivak, a crypto entrepreneur and consultant. “A 24-hour casino at your doorstep, in your home.”

Many cryptocurrencies have at least a theoretical function. Bitcoin, the largest digital currency, was envisioned as a long-term store of value, a kind of digital gold. Other digital currencies were designed to facilitate borrowing and lending.

But memecoins are simply online jokes converted into digital money, worth only what people are willing to pay for them. The most famous memecoin is dogecoin, a cryptocurrency linked to a meme of a talking Shiba Inu puppy. In 2021, it became one of the most popular digital currencies, minting dogecoin millionaires — until the hype died and the price plummeted. (Dogecoin is now worth about 13 cents a coin, down from a record of 73 cents.)

Trading memecoins can yield fast profits but carries risks. An anonymous entrepreneur might invent a fun-sounding coin, market it to the public and then suddenly disappear with the profits. It’s such a common phenomenon in the crypto world that there’s a name for it: a “rug pull.”

Enthusiasm for memecoins waned in 2022 when the broader crypto market imploded. Then the industry underwent a resurgence. In January, U.S. regulators approved a new investment product tied to bitcoin, propelling the cryptocurrency to its highest price.

Around that time, Pump.fun went live. The website resembles an old-fashioned arcade game, with flashing lights and a brightly colored leaderboard. Anyone can log on and quickly create a memecoin for about $2, uploading a cartoon to accompany the new price ticker.

“This just basically fast-tracked that whole process,” said Spivak. “It’s almost a zero-knowledge-type situation.”

On a recent afternoon, one investment option featured on Pump.fun’s homepage was a digital currency called Ponzi Dog. Another was named Tom and Jelly, a play on cartoon characters Tom and Jerry. Rapper Iggy Azalea recently created her own Pump.fun memecoin, $MOTHER.

Pump.fun’s leaders have not publicly revealed their identities. Social platform X accounts under the names Alon and Sapijiju operate as social media representatives for the site, sharing advice and memes.

In May, Pump.fun was forced to pause trading after someone siphoned $2 million in crypto from the company in an online attack. The site’s official X account blamed a former employee and said some of “the most esteemed security folks in the space” were working to ensure that the service was safe. The employee, Jarett Dunn, later said he had been arrested in connection with the theft.

In an interview, Dunn said his case was pending in a British court. Pump.fun is based in London, he said, and is led by three entrepreneurs in their early 20s: Noah Tweedale, Alon Cohen and Dylan Kerler.

A copy of Dunn’s employment contract identified Tweedale as CEO of Baton Corp., a corporate entity registered in England, and listed an email address for him at a Pump.fun domain. Public filings by Baton Corp. named Tweedale, Kerler and Cohen as the company’s directors.

While he worked at Pump.fun as a developer, Dunn said, the company had only a handful of employees and was raising money from investors. The young executives “were all very cordial and friendly and stuff,” said Dunn, who is working on his own cryptocurrency. “They probably have their own trepidation with having their face everywhere.”

In a message on Telegram, Tweedale confirmed that he runs Pump.fun with Cohen and Kerler. He said they had met in Oxford, England, and had years of experience trading memecoins such as dogecoin.

“Many times, these memecoins would be negatively affected by malicious actors in the space,” Tweedale said. “We wanted to create a place where people can buy memecoins safely.”

The shortage of information about Pump.fun doesn’t appear to have deterred crypto traders. Anyone investing in digital currencies should understand the risks, said Bailey. “I’m not ever risking more than I’m willing to lose,” he said.

Bailey was still riding high from his $BILLY windfall, which he had converted into Solana, a less-volatile cryptocurrency.

“When you see the right people talking about a specific asset, then that’s when you kind of have to buy,” he said. “Follow the smart money.”

Every day brings fresh opportunities for profit. After the attempted assassination of former President Donald Trump this month, Bailey watched as another memecoin shot up in value.

It was called $EAR.