Pump.fun, a popular memecoin generator, is at the center of a class action lawsuit accusing the company and its executives of violating U.S. securities laws.
Allegations of Securities Violations
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. Plaintiff Diego Aguilar alleges he suffered financial losses after purchasing several tokens on the platform, including the Fwog token and Griffain (GRIFFAIN). These tokens, aggressively marketed with promises of rapid returns, held high valuations despite their volatility.
Pump.fun’s "Ponzi-like" Structure
This lawsuit is part of a growing legal wave against crypto platforms engaging in questionable activities. Another case filed earlier this month by Burwick Law on behalf of Kendall Carnahan targeted Pump.fun over the sale of its 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,” describing the company's activities as a new form of 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 how to classify digital assets, particularly memecoins like those offered by Pump.fun. Under the newly elected administration of President Donald Trump, the SEC has indicated it may take a more active role in regulating crypto by forming a crypto task force. One of the key issues in this case is the legal classification of memecoins.
Pump.fun faces a challenging period with legal battles and public scrutiny, amidst increasing regulatory pressure. Despite this, the company continues to attract attention within the crypto community.
