Memecoin launch platform Pump.fun has been hit with another proposed class-action lawsuit, alleging the company and its executives earned nearly $500 million in fees while violating U.S. securities laws.
What is the Lawsuit About?
The lawsuit, filed in a New York federal court on January 30, claims Pump.fun engaged in deceptive marketing tactics, leading retail investors to suffer massive losses.
The suit was brought by Diego Aguilar, who alleges that the company, reportedly operated by U.K.-based Baton Corporation, used aggressive marketing to push highly volatile tokens.
According to the complaint, Pump.fun’s model enabled influencers to promote and launch digital tokens without regulatory approval. It accuses the company of running what it describes as an evolved form of Ponzi and pump-and-dump schemes.
Allegations Against Pump.fun
The lawsuit names Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale as defendants, all listed as officers of Baton Corporation. It argues that Pump.fun effectively acts as both an issuer and seller of tokens, controlling various aspects of their lifecycle, including technical infrastructure, liquidity, pricing, and promotion.
Aguilar, the lead plaintiff, claims to have lost money trading three specific memecoins launched via the platform—FWOG, FRED, and GRIFFAIN.
The filing states that while Pump.fun does not create the tokens itself, its automated system enables users to launch and sell nearly worthless tokens in minutes. This, the lawsuit claims, qualifies the company as a “joint issuer” of all memecoins launched through its platform.
The lawsuit alleges violations of the U.S. Securities Act and seeks financial compensation for affected investors. The plaintiffs are requesting rescission of all token purchases, monetary damages, and litigation costs.
Also Read: Pump.fun Faces Backlash Over Livestream Of User Threatening To Hang Self
Legal Challenges Mount for Pump.fun
This is not the first time Pump.fun has faced legal scrutiny. The same law firm behind the latest lawsuit, Wolf Popper LLP, filed a similar class-action suit against the platform on January 16.
That lawsuit accuses Pump.fun of selling unregistered securities, specifically targeting the PNUT token. The PNUT token, which once reached a $1 billion market capitalization, has since lost 89% of its value from its peak in November.
Beyond legal issues, Pump.fun has faced regulatory challenges as well. In March 2024, the U.K.’s financial regulator issued a warning against the platform, which led to Pump.fun banning U.K.-based users.
The company also received backlash for a controversial live-streaming feature that allowed some users to promote tokens with inappropriate content, leading to its eventual removal.
The lawsuit against Pump.fun raises broader concerns about the regulation of memecoin platforms and automated token creation tools.
While the crypto industry has long debated whether memecoins should be considered securities, legal actions like these could set precedents affecting similar projects.
Also Read: Pump.fun Revenue Drops By 66% After It Disables Livestream Feature Amid Controversy