Pump.fun, a popular memecoin generator, is at the center of a class action lawsuit over alleged violations of U.S. securities laws.
Allegations of Rights Violations
The lawsuit, filed on January 30, 2025, in the Southern District of New York, claims that Pump.fun and its key figures, including Baton Corporation Ltd, Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale, offered unregistered securities. Plaintiff Diego Aguilar alleges he suffered financial losses after purchasing tokens like Fwog and Griffain, which were marketed with promises of rapid returns despite their volatility.
Structure and Activities of Pump.fun
The lawsuit also accuses Pump.fun of operating a Ponzi-like structure and using influencers to create artificial demand for highly volatile memecoins. The company allegedly controlled the entire technical infrastructure, liquidity, and pricing of tokens, making it an issuer and statutory seller under U.S. securities law.
Regulatory Changes and Controversies
The SEC is grappling with how to classify digital assets. Under the newly elected administration of President Donald Trump, the SEC may take a more active role in regulating crypto by forming a task force. However, the key issue remains the legal classification of memecoins. The platform also faced backlash in November 2024 over a livestream feature that allowed users to broadcast unregulated content.
Pump.fun faces legal and regulatory challenges that could significantly impact its operations and the crypto industry as a whole.
