Memecoin creation platform Pump.Fun is facing a proposed class action lawsuit alleging securities violations, with claims that the platform raked in nearly $500 million in fees while enabling the sale of unregistered securities.
Background
- The lawsuit, filed in the Southern District of New York, argues that all tokens created on Pump.Fun qualify as securities under U.S. law.
- Lead plaintiff Diego Aguilar claims to have lost money trading three Pump.Fun-generated memecoins: FWOG, FRED, and GRIFFAIN.
- The lawsuit names the U.K.-registered Baton Corporation, which is alleged to operate Pump.Fun, alongside co-founders COO Alon Cohen, CTO Dylan Kerler, and CEO Noah Tweedale.
- This marks the second lawsuit against Pump.Fun in just two weeks, with a prior case alleging securities violations tied to PNUT, a Solana-based memecoin that once hit a $1 billion market cap.
Why should you pay attention?
- The case highlights ongoing regulatory uncertainty in the crypto space, particularly regarding when a token is classified as a security
- Under the Trump administration, the SEC has signaled a shift in crypto regulation, forming a task force to establish clearer guidelines for digital assets
- Pump.Fun has been under regulatory scrutiny before, including a warning from the U.K. 's financial regulator and past criticism for its now-disabled livestream feature
Who said what?
- Wolf Popper LLP, the law firm behind the lawsuit, is also involved in other crypto-related litigation, including a class action against the promoters of the HAWK token. They noted in a statement:
“At the heart of the lawsuit is the allegation that the $HAWK token constitutes an unregistered security. The complaint states, “[t]he $HAWK Token exhibits all the characteristics of an unregistered security under established legal precedent.”
The plaintiffs argue that the defendants leveraged Haliey Welch’s celebrity status to create “a speculative frenzy that caused the [$HAWK] Token’s market value to spike shortly after launch, reaching a significant market capitalization.”
- Furthermore, the latest lawsuit alleges that Pump.Fun’s automated tools effectively make it a "joint issuer" of the tokens launched on its platform. The lawsuit read:
“Pump.Fun’s standardized infrastructure and centralized management establish it as the entity fundamentally responsible for the issuance of these securities, regardless of the nominal involvement of individual developers or influencers”
Zooming out
- This lawsuit reflects broader legal challenges facing the crypto industry as regulators and courts continue to define the boundaries of securities laws
- With Pump.Fun generating significant revenue from fees and token launches, the outcome of this case could set a precedent for other memecoin and token-launching platforms
- As legal battles over crypto securities intensify, the industry awaits clearer regulations that could reshape how platforms like Pump.Fun operate in the future
