Copyrighted Memes: The Risks in Crypto

Introduction

“Internet memes” can take social media by storm. “Pepe the Frog”, “Doge”, “Grumpy Cat”, “Blinking White Guy”. Without even seeing an image, most social media users will recognize that these are popular memes from the last decade.

Over the past few years, a related trend has taken the cryptocurrency market by storm: “meme coins”. Crypto developers create coins based on trending memes and sell them online. Crypto traders, eager to be part of the next big thing, purchase the coin and tell others to do the same. Occasionally, meme coins reach exorbitant market capitalizations in the billions of dollars.[i]

Though this sounds like an enticing way to earn a quick dollar, meme coins are exposed to substantial risk, including from factors like the potential for fraud, pump-and-dump schemes, and market manipulation.[ii] And despite some becoming successful, most plummet to zero. Needless to say, meme coins are risky.

Beyond these widely recognized risks is an often overlooked area of concern: copyright law.

How Copyright Law Applies to Meme Coins

A “meme,” by definition, is “an amusing or interesting item (such as a captioned picture or video) … that is spread widely online especially through social media.”[iii] Memes are often a humorous photo that the creator captured, designed, and/or edited before posting online with an attention-grabbing caption.

Copyright can subsist in memes that are “original” works under the Copyright Act.[iv]

Consequently, the owner of the copyright in the meme, by default its creator, has the sole right to produce or reproduce (copy) it.[v] In reproducing a meme without permission, especially for financial gain, owners of meme coins can be exposed to substantial legal risk from the owner of the original copyright in the meme.[vi]

Real-World Examples

The copyright risks in this context are not only theoretical. In the past year alone, some of the most popular meme coins have faced this very issue:

• In December 2024, the creator of “Peanut the Squirrel” issued a cease-and-desist against the cryptocurrency exchange Binance, accusing it of copyright and trademark infringement in connection with the PNUT-themed meme coin offered on the Binance exchange.[vii] Since its all-time high (a month prior to the cease-and-desist being issued), the Peanut the Squirrel coin has dropped in value by over 90 percent – from over $2.20 to less than $0.15.[viii]
• In November 2024, the creator of the “Chill Guy” meme reportedly threatened legal action, including takedowns, against “for-profit institutions using the character without his permission” – especially the “just a chill guy” meme coin.[ix] The creator emphatically remarked: “I do not, and will never, endorse or condone any crypto-related projects involving my work.”[x] From its all-time-high, the “just a chill guy” coin has dropped by over 90 percent in value with impending legal action presumably being a factor for the drop.[xi]
• In April 2024, the organization associated with the Dogecoin token announced that it had secured exclusive legal rights to the iconic Shiba Inu image behind the meme after negotiating a deal with the owner of the dog.[xii] The organization noted that “[t]he lack of awareness about the Doge copyright held it back in the past.”[xiii] They are optimistic that this deal will open doors to “unprecedented partnerships and opportunities for Doge to shine across the web, screens, and beyond.”[xiv]

What This Means for Traders and Developers

Copyright considerations are yet another factor to be considered when dealing with meme coins. Traders and investors must understand the wide array of risks, including those associated with intellectual property rights, and recognize that any cryptocurrency using another creator’s original work may face legal action. For developers, it is critical to obtain permission from the owner of the copyright in the original meme when launching a meme coin.

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