Popular Solana-based Launchpad Pump.fun is under fire again after a law firm filed a class action lawsuit against the platform on behalf of investors who lost money on memecoins deployed in Pump.fun. The lawsuit argues that the platform allegedly sells unregistered securities, promotes pump-and-dump schemes, and lacks proper user protection measures.
Solana’s Pump.Fun Hit With Class Action Lawsuit
Over the last year, Pump.fun cemented itself as the most popular token launcher after its massive success, simultaneously fueled by and fueling this cycle’s memecoin mania. However, it stole the spotlight this time after Burwick Law initiated legal action against the platform.
On Wednesday, the law firm announced on X that it was “pursuing legal action on behalf of investors in pumpdotfun memecoins” after months of “working alongside everyday people that have lost significant amounts of money to memecoins, rugs, and unfulfilled promises.”
Burwick Law announces legal action against Pump.fun, Source: Burwick Law on X
The Solana-based platform was launched on January 19, 2024, and became a market sensation for simplifying the creation and deployment of memecoins. Its massive success saw the platform surpass Ethereum and most Solana protocols in fees and revenues during Q3 2024 and see a record-breaking $15 million daily revenue on January 1, 2025.
Nonetheless, Pump.fun’s year has also been controversial, as users have repeatedly criticized the platform for allegedly allowing harmful behavior and “ruining” the memecoin market. The law firm noted the launchpad’s recent controversy, stating:
“n the past few months, pumpdotfun has collected hundreds of millions of dollars in fees while illicit drug use, self-harm, racism, antisemitism, lewd acts, bestiality, violent and other antisocial acts were displayed on the platform. The creator of this platform has chosen to remain anonymous, despite acknowledging the importance of transparency in scaling and retail engagement, which raises serious concerns about accountability.
As reported by Bitcoinist, the Solana-based platform was under fire in November for its Livestream chaos. Several Pump.fun users broadcasted harmful and violent content using the platform’s livestream feature to become viral and pump their tokens.
The “trend” seemingly started when a 12-year-old trader launched a memecoin and tried to rug-pull investors during a Pump.fun livestream. As a result, users created numerous memecoins using controversial prompts to pump their tokens.
Ultimately, the platform acknowledged the situation and shut down the livestreaming feature indefinitely “to ensure the absolute safety” of users.
A ‘Novel Evolution In Ponzi And Pump-And-Dump Schemes’?
The law firm filed a class action complaint against Baton Corporation Ltd, a UK entity, and the platform’s three founders, Alon Cohen, Dylan Kerler, and Noah Bernhard Huge Tweedale.
The complaint, filed in the Southern District of New York on Thursday, alleges that Pump.fun had been offering and selling unregistered securities. The lawsuit argues that Peanut the Squirrel (PNUT) is an unregistered security, making its sale a violation of the Securities Act.
Class Action Complaint. Source: Cdn
Notably, the only plaintiff, Kendall Carnahan, claims to have lost only $231 from the purchase of the Solana memecoin but seeks to bring the complaint on behalf of other affected users.
Moreover, the lawsuit alleges that Pump.fun operations are a “novel evolution in Ponzi and pump and dump schemes,” which has allowed minors to engage with unregistered securities to minors.
In addition to Pump.Fun’s unique marketing techniques, the platform enables minors to both issue and purchase unregistered securities.
The plaintiff also claims that the Solana platform omitted basic investor protection measures, including Know-your-client procedures and anti-money laundering protocols, and failed to disclose risks to users.
“This is exemplified by the ease in which any person, regardless of age can create an account and purchase a token in less than 5 minutes,” the court document reads.
The news received a mixed response from the crypto community. Some Pump.fun users affirmed they would join the lawsuit, while other community members stated it wasn’t “realistic to expect anything” from it.
Solana (SOL) trades at $221 in the one-week chart. Source: SOLUSDT on TradingView
Featured Image from Unsplash.com, Chart from TradingView.com
