Pump.fun was hit with a proposed class action lawsuit for allegedly offering and selling “highly-volatile” unregistered securities to investors and making nearly $500 million from fees while allegedly violating U.S. securities laws.
The lawsuit asserts that all tokens created on Pump.fun’s platform are securities and thus should be regulated according to U.S. securities laws.
“Pump.Fun’s core function is to work alongside influencers to co-issue and market unregistered securities,” the filing said. “Inherent to its operations are a novel evolution in Ponzi and pump and dump schemes.”
The lawsuit was filed by plaintiff Diego Aguilar to the Southern District of New York Court on Jan. 30 against Baton Corporation, the company that owns and operates pump.fun, and its three founders, Alon Cohen, Dylan Kerler and Noah Tweedale. New York-based Wolf Popper LLP is the law firm behind the suit.
Aguilar claimed to have suffered losses from investing in three memecoins created via pump.fun, FRED, FWOG and GRIFFAIN, all of which were allegedly marketed to have the potential for “exponential” returns.
Pump.fun “deliberately targeted” younger and less affluent users with little experience in crypto trading by utilizing marketing campaigns on social media platforms such as TikTok that exploited the “fear of missing out,” luring them with “100x” or “1000x” returns, the plaintiff claimed.
Aguilar and his attorneys also claimed that pump.fun allegedly facilitated “pump-and-dump” memecoins by providing the infrastructure and neglected investor protection measures such as know-your-customer and anti-money laundering protocols.
Burwick Law, the firm representing Aguilar alongside Wolf Popper LLP, previously called for pump.fun users who experienced losses to join the legal action in an announcement on X posted earlier this month.
This is not the first legal challenge for Pump.fun; there are two other class action lawsuits, one involving the PNUT token and another concerning the HAWK token, both facilitated by Wolf Popper LLP and Burwick Law.
Pump.fun, now a year-old platform that lets anyone launch a memecoin on the Solana network, continues to make millions of dollars in revenue every day. In January, the platform raked in $116.72 million in fees, according to The Block’s data dashboard.
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