Pump.fun Faces Allegations of Securities Law Violations in Class Action Lawsuit
Pump.fun, a platform known for enabling the creation of memecoins, has been hit with another class action lawsuit, this time alleging that the company has amassed nearly $500 million in fees through activities that violate U.S. securities laws. The legal action, filed in the Southern District of New York, challenges the fundamental issue in the cryptocurrency sector: determining when a token should be classified as a security.
The lawsuit claims that all tokens generated through Pump.fun's platform are securities, thus falling under the regulatory purview of U.S. securities laws. This assertion remains contentious, with no clear legal consensus. The backdrop of this legal battle includes shifts in regulatory approaches under the new Donald Trump administration, where the SEC has initiated a crypto task force to clarify the regulatory landscape for digital assets.
Legal Challenges and Allegations
The plaintiff leading this lawsuit, Diego Aguilar, alleges substantial financial losses from trading Solana memecoins named FWOG, FRED, and GRIFFAIN created via Pump.fun's tools. Although Pump.fun does not directly create these tokens, the lawsuit argues that the platform's role in providing the means to generate and sell these tokens effectively makes it a "joint issuer." This accusation extends to Baton Corporation, a U.K.-based entity claimed to operate Pump Fun, along with its co-founders Alon Cohen, Dylan Kerler, and Noah Tweedale. Alon Cohen, the COO, has declined to comment on behalf of the company, and the other founders were unreachable at the time of reporting.
This is not the first legal challenge for Pump.fun. Just weeks prior, another class action was filed by the same law firm, Wolf Popper LLP, targeting the PNUT token, which at its peak boasted a $1 billion market cap but has since plummeted. That suit also accuses the company of offering unregistered securities. Additionally, in collaboration with Burwick Law, they are involved in a lawsuit against the promoters of the HAWK token, highlighting recurring legal entanglements.
Since its launch, Pump.fun has navigated through various controversies, including a warning from the U.K. financial regulator and backlash over its livestream feature, which was eventually disabled due to inappropriate content used for token promotion. Despite these challenges, or perhaps because of them, the platform has attracted significant attention and scrutiny.
The current lawsuit seeks not only to address these allegations but also to recover damages and cover legal fees, potentially setting a precedent for how memecoin platforms might be regulated in the future.