Pump.fun, a popular memecoin generator, has found itself at the center of a class action lawsuit accusing the company of violating U.S. securities laws.
Allegations of Securities Violations and False Promises
The lawsuit targets Pump.fun and its operators, including Baton Corporation Ltd, Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale. Plaintiff Diego Aguilar alleges financial losses from purchasing tokens like Fwog and Griffain (GRIFFAIN), which promised quick returns but often led to losses. The lawsuit claims Pump.fun violated the Securities Act by offering unregistered securities and seeks rescission of purchases and damages.
Pump.fun’s “Ponzi-like” Structure
This lawsuit adds to the growing legal pressure against crypto platforms engaged in questionable activities. Another case by Kendall Carnahan also targets Pump.fun over token sales, heightening scrutiny. The allegations point to a platform co-issuing unregistered securities and employing 'Ponzi' and 'pump-and-dump' tactics. Pump.fun is accused of controlling its token infrastructure and marketing, thereby acting as an issuer and statutory seller.
The SEC's Changing Approach to Crypto Regulation
The U.S. Securities and Exchange Commission (SEC) is grappling with digital asset classification, especially memecoins like those on Pump.fun. Under President Donald Trump's administration, the SEC may increase crypto regulation efforts through a new task force focused on digital asset guidelines. A key issue remains the classification of memecoins, which are argued to be excluded from securities classification under the 1987 amendment to the Securities Exchange Act.
Despite numerous legal and reputational challenges, Pump.fun continues to capture the attention of the crypto community. The classification and regulation of memecoins are likely to require ongoing focus from both market participants and regulators.
