Proposed Class Action Lawsuit Against Pump.fun
Memecoin generator Pump.fun faced another proposed class action lawsuit on Thursday, alleging that the company and its executives profited nearly $500 million in fees while breaching U.S. securities laws. This lawsuit underscores one of the most pressing questions in the crypto landscape: when does a token qualify as a security?
The lawsuit, lodged in the Southern District of New York (SDNY), argues that every token generated through Pump.fun’s platform should be classified as a security, thus making it subject to U.S. securities regulations. However, this remains a contentious and unresolved legal issue. Under the recent Donald Trump Administration, the U.S. Securities and Exchange Commission (SEC) has signaled a shift in its approach to crypto regulation, establishing a new crypto task force aimed at developing a clear regulatory framework for the industry.
The lead plaintiff, Diego Aguilar, claims to have incurred losses while trading three specific memecoins created via Pump.fun — FWOG, FRED, and GRIFFAIN. While Pump.fun itself does not directly create the tokens mentioned in the lawsuit, the filing contends that the company effectively orchestrates a system that enables users to create and sell virtually worthless digital tokens in a matter of minutes, thus qualifying as a “joint issuer” of all tokens launched on its platform.
Aguilar’s lawsuit also identifies a U.K.-registered entity known as Baton Corporation, which it claims operates Pump.fun. Additionally, it names three co-founders of the company: COO Alon Cohen, CTO Dylan Kerler, and CEO Noah Tweedale. While Cohen refrained from making official comments, stating he was speaking on his own behalf, attempts to reach the other team members for comment were unsuccessful by the time of publication.
The law firm Wolf Popper LLP that filed this lawsuit had previously lodged another class action against Pump.fun just two weeks prior. That suit, filed on January 16, featured a different lead plaintiff but similarly accused Baton Corporation and its three co-founders of selling an unregistered security — the PNUT token, a Solana-based memecoin inspired by Peanut the Squirrel, which allegedly achieved a market capitalization of $1 billion. As of now, the PNUT token has plummeted 89% from its peak of $2.25 last November.
In addition to the recent lawsuits against Pump.fun, Wolf Popper LLP is also collaborating with Burwick Law, a firm specializing in crypto litigation, to pursue a class action against the promoters of the HAWK token, a memecoin associated with influencer Hailey Welch, also known as Hawk Tuah.
Despite being relatively new to the market, having launched only a year ago, Pump.fun has already attracted considerable controversy. Last March, the U.K. financial regulatory authority issued a warning against the platform, prompting Pump.fun to prohibit users from the U.K. Furthermore, it faced backlash for its now-disabled livestream feature, which allowed certain users to promote their tokens using violent or sexually explicit content.
As this legal battle unfolds, the lawsuit seeks damages as well as attorneys’ fees for the involved parties. Danny Nelson contributed reporting.
