A proposed class action lawsuit has been filed against memecoin generator Pump.fun, alleging the company and its executives have accumulated nearly $500 million in fees while disregarding US securities laws. The lawsuit, filed in the Southern District of New York, centers on the ambiguity surrounding the classification of tokens as securities. Although the suit asserts that all tokens created using Pump.fun's platform are securities and therefore subject to US securities laws, this remains a matter of debate.
The US Securities and Exchange Commission has indicated a shift in its approach to crypto regulation under the new administration, establishing a task force to develop a clear regulatory framework for the industry. The lead plaintiff, Diego Aguilar, claims to have incurred losses from trading three memecoins created on the Pump.fun platform - FWOG, FRED, and GRIFFAIN. The lawsuit accuses Pump.fun of orchestrating a scheme by providing automated tools for creating and selling 'nearly worthless' digital tokens, thereby qualifying as a 'joint issuer' of all tokens launched on its platform. The lawsuit names Baton Corporation, a UK-registered company allegedly operating Pump.fun, and three of its co-founders: Alon Cohen, Dylan Kerler, and Noah Tweedale.
This is not the first lawsuit filed against Pump.fun; another class action suit was filed just two weeks ago, accusing the company of selling an unregistered security. Pump.fun has been embroiled in controversy since its launch, including a warning from the UK financial regulator and criticism for its now-disabled livestream feature, which allowed users to promote tokens with violent or explicit content.
The lawsuit seeks damages and attorneys' fees.