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Novelty companies make them from real coins. It is not illegal to make them, but it IS illegal to use them as money after they have been altered, so they are worthless as money, but they have a value as a novelty, usually a couple of dollars if you look on eBay. The idea that it is illegal to deface money goes back to ancient Rome or maybe even earlier. The penalty for defacing the Emporer's coins (they all "belonged" to the government but the people were allowed to "use" them) could be death.

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Q: Why are magician's coins not illegal if they are made worthless?
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