In recent weeks, the PUMP token from the Pump.fun platform has faced significant issues, including a sharp price drop and legal troubles.
Token Price Drop
Pump.fun co-founder Alon Cohen stated that the airdrop for the token is not expected in the near future, resulting in an 18.7% decline in its price. At the time of writing, the market value of the meme coin is $0.003, according to CoinGecko. In the past week, PUMP has fallen by 42.4%.
Lawsuit Against Pump.fun and Its Creators
Burwick Law has filed a class action lawsuit against Pump.fun, Solana Labs, Solana Foundation, Jito Labs, and Jito Foundation. The plaintiffs accuse these parties of operating an illegal gambling business. Pump.fun has been compared to a 'one-armed bandit', mass-producing and promoting tokens without proper disclosure and investor protection. Allegations state that Pump.fun allowed tokens to be launched and traded anonymously, without identity verification. The 'meme token factory' is claimed to have created unfair conditions for users from the outset. These charges were brought under the Organized Crime and Corrupt Practices Act. The defendants face accusations of fraud, false advertising, and offering unregistered securities. Estimated damages to users range from $4 to $5.5 billion based on on-chain data.
Competition in the Meme Token Market
Meanwhile, Pump.fun's competitor, the LetsBonk platform, announced a program to support tokens within its ecosystem. The team plans to redirect 1% of its revenue from the marketing fund to buy back tokens in the platform's most successful trading pairs. According to Dune, LetsBonk has made approximately $1.4 million in fees in the last 24 hours. LetsBonk's founder stated that buybacks will take place weekly, and any trading pair achieving 'high scores' will be eligible for the program. The total capitalization of tokens launched on LetsBonk has already surpassed $1 billion, with Useless Coin being the largest asset in the ecosystem, followed by ANI.
Overall, Pump.fun is facing challenges related to both the price drop of the PUMP token and legal repercussions, while its competitors continue to thrive in the market.
