Popular Solana memecoin generator platform Pump.fun has been slapped with a class-action lawsuit in the US for allegedly selling highly volatile unregistered securities presented as memecoins.
The suit was filed by Diego Aguilar in a New York federal court on 30 January. Notably, though Aguilar invested in three tokens, the complaint claims that all coins on this platform are actually “unregistered security memecoins.”
Therefore, it says, the company made almost $500 million in fees by violating US securities laws.
**LAWSUIT ALERT**
Burwick Law and @WolfPopperLLP have filed a second federal class action lawsuit on behalf of investors against the PumpdotFun platform.
Full complaint available below.
— Burwick Law (@BurwickLaw) January 30, 2025
The plaintiff has requested a trial by jury, seeking relief in the form of monetary damages and litigation costs. But the document added that the members of the proposed lawsuit are “so numerous that joinder of all members is impracticable.” There may be hundreds or thousands of them, it added.
As defendants, the complaint names the UK-based Baton Corporation as the company behind Pump.fun, the platform itself, as well as three people listed as officers of Baton Corporation.
‘Guerilla Marketing’ and ‘Ponzi Schemes’
The lawsuit makes a number of allegations against the company.
“Pump.fun’s core function is to work alongside influencers to co-issue and market unregistered securities,” the complaint reads. “Inherent to its operations are a novel evolution in Ponzi and pump and dump schemes.”
Platforms like this use sophisticated marketing strategies that create the impression of legitimacy and security, it says. At the same time, they downplay the inherent risks and emphasize potential returns to enable and support speculative trading.
It further alleges that the company utilized “guerilla marketing,” which it “benignly termed the attention economy,” to promote the coins, grow its business rapidly, and support the mass adoption of these unregistered securities.
“Pump.Fun’s promotional materials consistently emphasize extraordinary returns, with statements like “100x your money” and “222,222x growth” presented as realistic possibilities,” the document states.
Notably, it reads, Pump.fun’s mandatory fee structure ensures that every transaction of every token generates revenue for Pump.Fun and the three officers. Therefore, there is a direct financial interest in promoting and maintaining trading activity across all tokens.
Moreover, the platform allows anybody, including minors, to create tokens in a matter of minutes without any basic investor protections. The plaintiff added that tokens on Pump.fun also lack any functional utility or real-world application.
Another significant charge is that Pump.fun enables a marketplace of digital securities “that promote child abuse, potentially underage pornography, antisemitism, racism, self-harm, advocating violence, the continued and ongoing use of the unlicensed intellectual property.”
‘Perverse distortion of Crypto Promise’
Among the tokens that the defendants actively promoted are the three that the plaintiff bought in late 2024: First Convicted Raccoon, FWOG, and GRIFFAIN.
“The Defendants created clear expectations of profits through systematic marketing efforts between November 2024 and January 2025,” says the lawsuit.
First Convicted Raccoon (FRED) reached an all-time high (ATH) in November 2024, dropping 98% since. The coin is also down 84% over the past month.
FWOG hit its ATH in November 2024 and fell 87% since. It’s down 64% in the past month.
GRIFFAIN recorded an ATH on 22 January 2025, falling 64% since. Overall, its price decreased by 41% over the past 30 days.
FRED all-time chart:
However, the same firm, Burwick Law, filed another complaint against Pump.fun in mid-January on behalf of plaintiff Kendall Carnahan.
At the time, they claimed that the platform was selling Peanut the Squirrel (PNUT) in violation of US securities laws.
Moreover, Max Burwick, the firm’s founder and partner, called Pump.fun and memecoins “multi-level marketing scams, preying on human desperation.”
In his opinion piece titled ‘The Promise of Crypto v. Crypto’s Great Pretender,’ he opined that Pump.fun and similar platforms that “exploit” memecoins “have nothing to do with advancing crypto’s capabilities – they are a perverse distortion of its promise,” he said.
Meanwhile, Pump.fun just recently hit a new all-time high of $3.3 billion in weekly trading volume, following the launch of official US President Donald Trump-themed memecoins.
