Pump.fun Faces $500M Lawsuit Over Alleged Securities Violation

Solana-based memecoin launch platform Pump.fun has come under regulatory security following a lawsuit against the project in a New York federal court. According to the plaintiff, the platform allegedly offered and sold “highly volatile” unregistered securities to investors.

Complaint Against Pump.fun 

Diego Aguilar, a Pump.fun investor, accused the platform of generating nearly $500 million in fees from creating highly volatile memecoins. He argued that all tokens created on Pump.fun’s platform are securities and thus should be regulated according to U.S. securities laws.

The complaint identified Baton Corporation, a company based in the U.K., as the creator of Pump.fun. It also mentioned the platform’s three founders, Noah Tweedale (CEO), Alon Cohen (COO), and Dylan Kerler (CTO).

“Pump.Fun’s core function is to work alongside influencers to co-issue and market unregistered securities. Inherent to its operations are a novel evolution in Ponzi and pump and dump schemes. Pump.fun has extracted nearly half a billion dollars in fees from investors by selling highly volatile unregistered securities”, the filing said.

Furthermore, Aguilar claimed to have suffered significant losses from investing in three memecoins created via Pump.fun, FRED, FWOG, and GRIFFAIN, all allegedly marketed to have the potential for exponential returns.

Although he acknowledged that Pump.fun did not create these tokens, he argued that the platform provided the issuers with automated tools, enabling anyone to make and sell worthless tokens within minutes. Therefore, Pump.fun is a joint issuer of all the tokens launched on its platform.

Pump.fun Criticism Heightens

Earlier this month, Pump.fun was sued by Kendall Carnahan, who accused the platform of exploiting users and promoting inappropriate content relating to sexual and child abuse.

Last year, Pump.fun faced heavy criticism from users, who had many prominent voices in the community calling for a ban. Several memecoins developers pulled dangerous stunts like threatening to commit suicide to promote their tokens.

Despite the legal woes and heavy criticism, Pump.fun has continued to witness increased user activity. Data from Dune Analytics shows that Pump.fun’s weekly trading volume currently stands at $3.3 billion.