Pump.fun, a popular memecoin generator, has found itself at the center of a new class action <a href="https://aboutblaw.com/bg4F" rel="noopener noreferrer nofollow">lawsuit</a> accusing the company and its executives of violating U.S. securities laws.&nbsp;The lawsuit, filed on January 30, 2025, in the Southern District of New York, claims that Pump.fun generated nearly $500 million in fees while offering unregistered securities.&nbsp;<h2 id="span-span-strong-allegations-of-securities-violations-and-false-promises-strong-span-span">Allegations of Securities Violations and False Promises</h2>The lawsuit targets&nbsp;Pump.fun and its operators, including&nbsp;Baton Corporation Ltd (which runs Pump.fun) and key figures&nbsp;Alon Cohen,&nbsp;Dylan Kerler, and&nbsp;Noah Bernhard Hugo Tweedale. Plaintiff&nbsp;Diego Aguilar alleges that he suffered financial losses after purchasing several tokens on the platform, including the&nbsp;Fwog token and&nbsp;Griffain (GRIFFAIN). These tokens, which were aggressively marketed through memecoin culture and promises of rapid returns, saw high valuations despite their volatility.Aguilar claims the tokens were promoted by Pump.fun with exaggerated promises of exponential profits. For instance, the&nbsp;Fwog token was marketed as having a&nbsp;$500 million market cap, but the reality was far different, with many investors suffering significant losses.The lawsuit highlights that Pump.fun’s operations allegedly violate the&nbsp;Securities Act by offering tokens that should be classified as securities but are instead marketed without the required registration. The plaintiff seeks relief in the form of&nbsp;rescission of all token purchases,&nbsp;monetary damages, and litigation costs.<h2 id="span-span-strong-pump-fun-s-ponzi-like-structure-strong-span-span">Pump.fun’s “Ponzi-like” Structure</h2>This lawsuit is part of a growing legal wave against crypto platforms engaging in questionable activities. Another <a href="https://cdn.prod.website-files.com/653c0500b1821c63d5bfc34b/6789b6f9d43b361b9e51336f_1.pdf" rel="noopener noreferrer nofollow">case filed</a> earlier this month by&nbsp;Burwick Law on behalf of&nbsp;Kendall Carnahan targeted Pump.fun over the sale of its&nbsp;Peanut the Squirrel Token, further increasing the pressure on the platform.This legal complaint accuses Pump.fun of operating a platform that “co-issues and markets unregistered securities.” It further describes the company’s activities as a new form of&nbsp;Ponzi and&nbsp;pump-and-dump schemes. According to the lawsuit, Pump.fun used&nbsp;influencers to generate artificial hype and urgency around&nbsp;highly volatile memecoins, causing retail investors to make hasty, uninformed purchases.The lawsuit also claims that&nbsp;Pump.fun had full control over the technical infrastructure, liquidity, pricing, and promotion of the tokens sold on its platform, making the company an issuer and statutory seller under U.S. securities law.<h2 id="span-span-strong-the-sec-s-changing-approach-to-crypto-regulation-strong-span-span">The SEC's Changing Approach to Crypto Regulation</h2>The&nbsp;U.S. Securities and Exchange Commission (SEC) is currently grappling with how to classify digital assets, particularly memecoins like those offered by Pump.fun. While the&nbsp;SEC has historically been hesitant to classify many crypto tokens as securities, the question remains unresolved.&nbsp;Under the newly elected administration of&nbsp;President Donald Trump, the SEC has indicated it may take a more active role in regulating crypto by forming a&nbsp;crypto task force. This task force is tasked with establishing clearer guidelines for digital assets, which could have a significant impact on the ongoing legal battles involving crypto companies like Pump.fun.One of the key issues in this case is the legal classification of&nbsp;memecoins. An <a href="https://x.com/ApateAI/status/1885124927977664622?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1885124927977664622%7Ctwgr%5E6c42cd7d3196184c899145f2bf529ff6600ed244%7Ctwcon%5Es1_&amp;ref_url=https%3A%2F%2Fcoinpedia.org%2Fnews%2Fpump-fun-faces-500m-lawsuit-are-memecoins-securities%2F" rel="noopener noreferrer nofollow">argument</a> has emerged that&nbsp;memecoins are explicitly excluded from being considered securities under the&nbsp;1987 Securities Exchange Act amendment. In fact, a similar case in 2019 involving&nbsp;Dogecoin derivatives resulted in the SEC losing its battle to classify them as securities.<div><blockquote class="twitter-tweet">According to the 1987 Securities Exchange Act amendment, memecoins were explicitly excluded from securities classification. The SEC lost a similar case in 2019 against DogeCoin derivatives— Apate (@ApateAI) <a href="https://twitter.com/ApateAI/status/1885124927977664622?ref_src=twsrc%5Etfw" rel="noopener noreferrer nofollow">January 31, 2025</a></blockquote></div><h2 id="span-span-strong-controversies-and-legal-struggles-strong-span-span">Controversies and Legal Struggles</h2>In addition to its legal battles,&nbsp;Pump.fun has faced controversies related to its platform features. Most notably, in November 2024, the platform introduced a&nbsp;livestream function that was quickly misused by users to broadcast disturbing content, including graphic violence and inappropriate footage. This led to public backlash, forcing the platform to disable the feature.Pump.fun has also been <a href="https://www.fca.org.uk/news/warnings/pumpfun" rel="noopener noreferrer nofollow">scrutinized</a> by the&nbsp;U.K. financial regulator, which issued a warning against the platform last March. In response, Pump.fun banned users from the U.K. in an attempt to comply with regulatory demands. Despite these controversies, the company’s business model continues to generate significant fees and attention in the crypto community.

Pump.fun Faces Lawsuit Over $500M in Fees and Alleged Securities Violations

Table of Contents

BSCN

Další články publikované 31. 1. 2025

Weekly Article Recap: 1/20-1/24

Grayscale Launches Dogecoin Trust to Expand Financial Access

Circle Mints Another 250M $USDC Through Solana to Fulfill Increasing Demand

Lido Primer

Crypto Analyst Predicts XRP Price Surge To $6.4 As The Coin Rallies Again While FXGuys ($FXG) Is ...

Apple records an all-time high revenue of $124.3 billion for quarter ending Dec 2024

Join our free newsletter for daily crypto updates!