Pump.fun, a platform known for creating Solana-based memecoins, has been slapped with a proposed class-action lawsuit. The suit alleges that all the crypto tokens the platform has helped to create are essentially “unregistered security memecoins”. It’s estimated that the platform raked in nearly $500 million through this mechanism.
The lawsuit was launched by Diego Aguilar at a federal court in New York on January 30. He argues that Pump.fun, supposedly operated by UK-based Baton Corporation, employed aggressive marketing techniques to create false urgency for these highly volatile tokens, leading to significant losses for retail investors. The suit blasts Pump.fun’s operations as a new and sophisticated form of Ponzi and pump-and-dump schemes, describing it peculiarly as “working alongside influencers to co-issue and market unregistered securities”.
Three individuals listed as officers of Baton Corporation on UK Companies House, namely Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale, are also named in the lawsuit. Aguilar’s suit targets all tokens on the platform, asserting that Pump.fun acted as a statutory seller controlling the tokens’ pricing, promotion, and infrastructure.
The suit seeks recourse in terms of the repayment of all token purchases, reimbursement for investor losses, and legal costs. It alleges breaches of the Securities Act. At this moment, neither Pump.fun nor Baton Corporation have responded to the lawsuit’s claims.
This isn’t the first legal complication the platform has faced. Earlier in January, US law firm Burwick Law announced it was launching a lawsuit against Pump.fun citing investors’ losses caused by memecoin rug pulls and unkept promises. The announcement follows disturbing revelations of alarming behaviors displayed on the platform, which ranged from harmful acts to hate speech. It’s worth noting that the platform witnessed a surge in its usage recently with the introduction of Trump family memecoins, reaching a weekly trading volume of a staggering $3.3 billion.