Pump.fun, a popular memecoin generator, has found itself at the center of a new class action lawsuit accusing the company and its executives of violating U.S. securities laws.
Allegations of Securities Violations and False Promises
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. The lawsuit targets Pump.fun and its operators, including Baton Corporation Ltd and key figures Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale. Plaintiff Diego Aguilar alleges that he suffered financial losses after purchasing several tokens on the platform, including the Fwog token and Griffain (GRIFFAIN).
Pump.fun’s “Ponzi-like” Structure
This lawsuit is part of a growing wave of legal actions against crypto platforms engaging in questionable activities. Burwick Law filed a similar suit earlier this month on behalf of Kendall Carnahan, accusing Pump.fun of selling the Peanut the Squirrel token. The legal complaint accuses Pump.fun of distributing unregistered securities and engaging in Ponzi and pump-and-dump schemes.
The SEC's Changing Approach to Crypto Regulation
The U.S. Securities and Exchange Commission (SEC) is currently grappling with the classification of digital assets, particularly memecoins like those offered by Pump.fun. While the SEC has historically hesitated to classify many crypto tokens as securities, the question remains unresolved. Under President Donald Trump’s administration, the SEC may take a more active role in regulating crypto by forming a task force to establish clearer guidelines for digital assets.
Pump.fun continues to face legal and regulatory challenges, highlighting the need to reassess its business model and practices in the rapidly evolving world of cryptocurrencies.
