Popular Solana-based Launchpad Pump.fun is under fire again after a law firm filed a category motion 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 Motion Lawsuit
Over the past 12 months, Pump.fun cemented itself as the most well-liked token launcher after its massive success, concurrently fueled by and fueling this cycle’s memecoin mania. Nevertheless, it stole the highlight this time after Burwick Law initiated legal motion against the platform.
On Wednesday, the law firm announced on X that it was “pursuing legal motion on behalf of investors in pumpdotfun memecoins” after months of “working alongside on a regular basis those that have lost significant amounts of cash to memecoins, rugs, and unfulfilled guarantees.”
Burwick Law pronounces legal motion against Pump.fun, Source: Burwick Law on X
The Solana-based platform was launched on January 19, 2024, and have become 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 every day revenue on January 1, 2025.
Nonetheless, Pump.fun’s 12 months 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 a whole lot of tens 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 stay 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 turn into viral and pump their tokens.
The “trend” seemingly began when a 12-year-old trader launched a memecoin and tried to rug-pull investors during a Pump.fun livestream. Because of this, users created quite a few memecoins using controversial prompts to pump their tokens.
Ultimately, the platform acknowledged the situation and shut down the livestreaming feature indefinitely “to make sure absolutely the safety” of users.
A ‘Novel Evolution In Ponzi And Pump-And-Dump Schemes’?
The law firm filed a category motion grievance against Baton Corporation Ltd, a UK entity, and the platform’s three founders, Alon Cohen, Dylan Kerler, and Noah Bernhard Huge Tweedale.
The grievance, filed within the Southern District of Latest 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 Motion Criticism. Source: Cdn
Notably, the one plaintiff, Kendall Carnahan, claims to have lost only $231 from the acquisition of the Solana memecoin but seeks to bring the grievance on behalf of other affected users.
Furthermore, the lawsuit alleges that Pump.fun operations are a “novel evolution in Ponzi and pump and dump schemes,” which has allowed minors to have interaction with unregistered securities to minors.
Along with Pump.Fun’s unique marketing techniques, the platform enables minors to each issue and buy 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 didn’t disclose risks to users.
“That is exemplified by the convenience wherein any person, no matter age can create an account and buy a token in lower than 5 minutes,” the court document reads.
The news received a mixed response from the crypto community. Some Pump.fun users affirmed they’d join the lawsuit, while other community members stated it wasn’t “realistic to expect anything” from it.
Solana (SOL) trades at $221 within the one-week chart. Source: SOLUSDT on TradingView
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