Pump.fun, a popular memecoin generator, is now facing a class action lawsuit accusing the company and its executives of violating U.S. securities laws.
Allegations of Legal Violations
Filed on January 30, 2025, in the Southern District of New York, the lawsuit claims Pump.fun generated nearly $500 million in fees while offering unregistered securities. It targets Baton Corporation Ltd and key figures: Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale. Plaintiff Diego Aguilar alleges financial losses from purchasing tokens on Pump.fun, including the Fwog and Griffain (GRIFFAIN) tokens, which were aggressively marketed through memecoin culture and promised rapid returns.
Lawsuit Against Pump.fun
This lawsuit is part of a growing legal wave against crypto platforms engaged in questionable activities. Another complaint was filed by Burwick Law on behalf of Kendall Carnahan targeting Pump.fun over the sale of its Peanut the Squirrel Token, increasing the pressure on the platform. The complaint accuses Pump.fun of operating a platform that 'co-issues and markets unregistered securities,' describing its activities as a new form of Ponzi and pump-and-dump schemes.
Regulation and SEC
The U.S. Securities and Exchange Commission (SEC) is currently dealing with how to classify digital assets, especially memecoins like those offered by Pump.fun. While the SEC has historically been hesitant to classify many crypto tokens as securities, the question remains unresolved. Under President Donald Trump's new administration, the SEC might take a more active role in regulating crypto by forming a crypto task force, tasked with establishing clearer digital asset guidelines, potentially impacting ongoing legal battles like those involving Pump.fun.
Pump.fun faces numerous legal and regulatory challenges that may have long-term impacts on its business model and operations. The ongoing legal battle is just part of the complexities in the changing landscape of SEC regulations on crypto assets.
