Pump.fun Faces Second Class-Action Lawsuit Amid Allegations of Securities Fraud

Pump.fun, a platform known for launching meme coins on the Solana blockchain, is facing mounting legal challenges. A second class-action lawsuit was filed on January 30 in the Southern District of New York, just two weeks after the first case.

Legal Battle Over Unregistered Securities

The lawsuit, led by Burwick Law and Wolf Popper LLP, accuses Pump.fun of violating U.S. securities laws by facilitating the sale of unregistered securities disguised as meme tokens. The filing names Baton Corporation Ltd, the company behind Pump.fun, along with executives Alon Cohen, Dylan Kerler, and Noah Tweedale as defendants.

Lead plaintiff Diego Aguilar claims he suffered financial losses after purchasing tokens such as FWOG, FRED, and GRIFFAIN on Pump.fun’s platform. The complaint alleges that Pump.fun promotes these tokens with aggressive marketing, leveraging meme culture and promises of exponential gains. One of the cited tokens, FWOG, reportedly reached a $500 million market cap before plummeting.

This latest case follows a lawsuit filed on January 16 by Burwick Law on behalf of Kendall Carnahan. That lawsuit targeted Pump.fun over the sale of the PNUT token, a Solana-based memecoin inspired by Peanut the Squirrel, which allegedly peaked at a $1 billion market cap before losing most of its value.

Accusations of Fraud and Market Manipulation

According to the filings, Pump.fun operates by partnering with influencers to co-issue and market tokens, creating what plaintiffs describe as an evolved form of Ponzi and pump-and-dump schemes. The lawsuit argues that the platform extracts massive fees from investors while providing little real value.

Burwick Law founder Max Burwick has been vocal about his stance on platforms like Pump.fun. On January 15, he called them “the ultimate evolution of multi-level marketing scams, preying on human desperation and the digital attention economy.” That same day, his firm urged investors to come forward, launching a website to assist affected clients.

Regulatory Uncertainty and Broader Industry Implications

A key issue in the case is the legal classification of tokens created on Pump.fun’s platform. The lawsuit claims that all tokens launched on the site qualify as securities, requiring compliance with U.S. regulations. However, the legal status of such tokens remains unresolved. The U.S. Securities and Exchange Commission (SEC), under the new Trump administration, has signaled a shift in crypto oversight and is forming a task force to establish clearer regulations.

Despite its legal troubles, Pump.fun remains highly profitable. Data from Dune Analytics shows the platform has generated nearly $500 million in total revenue, with $47 million collected in the past week alone.

Past Controversies and Platform Scrutiny

Pump.fun has previously faced scrutiny from regulators. In March 2024, the U.K. Financial Conduct Authority issued a warning about the platform, prompting it to block U.K. users. In November 2024, it launched a livestream feature to boost engagement, but reports surfaced of users misusing it to broadcast explicit and violent content. The backlash forced Pump.fun to shut down the feature.

As the legal battle unfolds, the outcome of these cases could set a precedent for how regulators classify meme coins and the liability of platforms facilitating their creation. Pump.fun’s future now hinges on the courts and the evolving regulatory landscape.