- Burwick Law and Wolf Popper LLP have filed a federal class action against the Solana-based decentralized platform for launching meme coins, Pump.fun.
- The launchpad has faced ongoing criticism from community members, as many speculative tokens created on Pump.fun have seen millions in market cap, yet the profits were largely concentrated in the hands of fewer than 10% of investors.
The Solana-based launchpad Pump.fun, introduced in January 2024 by pseudonymous developer Alon, is now at the center of a major legal dispute. Law firms Burwick Law, specializing in digital consumer protection, and Wolf Popper LLP, a leading class-action litigation firm focusing on securities fraud, have filed a federal class-action lawsuit against the platform. The allegations accuse Pump.fun of exploiting vulnerable retail investors by promoting and trading controversial meme-coins, with the platform having facilitated the launch of 6.12 million tokens.
Pump.fun operated a live streaming feature until November 2024, allowing token developers to advertise their projects. However, the platform faced troubling reports, including violent threats from users, such as one individual who allegedly shot a gun when their token’s value rose. Additionally, Pump.fun has hosted various scams, including rug pulls.
One case involved a 13-year-old who launched the “Gen Z Quant” token, marketed it on the platform, and subsequently sold off 5% of the token’s total supply. This action caused the market cap to reach $1 million, with the creator pocketing $50,000. In defense of the platform, Alon responded to the criticism by stating, “We take active steps to moderate illegal content on the site.”
Factual Allegations and Controversial Practices
The lawsuit accuses Pump.fun of enabling and profiting from activities involving racism, torture, sexual content, and other social vices. One particular incident occurred in November 2024 during a Pump.fun livestream. During this broadcast, a user allegedly threatened to commit suicide if their token did not reach a specific market capitalization.
The lawsuit alleges that Pump.fun violated federal securities laws by offering unregistered securities, with a focus on the Peanut the Squirrel (PNUT) token. Released by Baton Corporation on October 31, 2024, PNUT was marketed through hype-driven campaigns featuring space-themed imagery and promises of massive returns. The complaint argues that the sale of PNUT violated Securities and Exchange Commission (SEC) regulations, as the token was never registered.
According to the complaint, Pump.fun has been operating similarly to a Ponzi scheme, generating over $500 million in fees by leveraging cultural and sociological trends in order to increase engagement and profitability.
The plaintiffs also claim that Pump.fun’s marketing strategy deliberately fostered unrealistic profit expectations and fueled FOMO through rare success stories. The platform often highlighted highly successful tokens as representative of typical returns, encouraging users to believe they could achieve similar outcomes.
The platform is also accused of lacking fundamental safeguards, such as Know Your Customer (KYC) verification, Anti-Money Laundering (AML) compliance, and proper risk disclosures. The absence of these measures allegedly allowed for fraudulent schemes, including “pump-and-dump” operations, in which token prices were artificially inflated before being sold off, leaving retail investors with significant losses.
In December 2024, the UK Financial Conduct Authority (FCA) warned against Pump.fun for offering unauthorized financial services, advising UK residents to avoid the platform. In response, Pump.fun blocked access for UK users, though it did not officially confirm this action.
