Pump.fun faces a class action lawsuit claiming it violated U.S. securities laws.
Allegations of Securities Violations
Pump.fun and its executives, including Baton Corporation Ltd, face accusations of offering unregistered securities. The plaintiff, Diego Aguilar, claims financial loss after purchasing tokens like Fwog and Griffain (GRIFFAIN) that were aggressively marketed with promises of high profits.
Ponzi-like Structure
The lawsuit alleges Pump.fun operated Ponzi and pump-and-dump schemes. The company purportedly used influencers to create artificial hype around volatile memecoins, leading to uninformed purchases by investors. Pump.fun controlled the technical infrastructure, liquidity, and pricing on its platform.
The SEC's Approach to Crypto Regulation
The SEC struggles with classifying digital assets. Under the new administration, there is consideration for a more active role in crypto regulation by establishing a dedicated task force, which could impact ongoing legal battles.
The lawsuit against Pump.fun highlights the need for clear crypto regulation to protect investors from risks associated with unregistered securities.
