Memecoin factory Pump.fun has been hit with another class action lawsuit, alleging the company violated U.S. securities laws by facilitating the creation and sale of unregistered tokens. This marks the third lawsuit against Pump.fun, following similar suits concerning the PNUT and HAWK tokens. The lawsuit, filed in the Southern District of New York, centers on the question of when a cryptocurrency token constitutes a security and is subject to securities regulations.
Memecoin factory Pump.fun has been hit with another class action lawsuit accusing the company of violating securities laws.The law firm behind the suit is also behind two other class action lawsuits against Pump.
fun – one representing buyers of PNUT and the other representing buyers of HAWK.on Thursday, accusing the company and its executives of raking in nearly $500 million in fees while violating U.S. securities laws. The suit, filed in the Southern District of New York , hinges on the crypto industry’s biggest lingering question — when is a token a security? Though the suit alleges that every token created using Pump.fun’s platform is a security, and thus subject to U.S. securities laws, that’s far from a matter of settled law. Under the new Donald Trump Administration, the U.S. Securities and Exchange Commission has indicated it's changing tack on crypto regulation,The lead plaintiff in Thursday's suit, Diego Aguilar, claimed to have lost money trading three Pump.fun-created memecoins in particular — FWOG, FRED and GRIFFAIN. Though Pump.fun does not itself create any of the tokens covered in the suit, the filing accuses the company of “orchestrat this scheme by providing automated tools that allow anyone to create and sell nearly worthless digital Tokens in minutes” and thus qualifies as a “joint issuer” of all tokens launched on its platform. Aguillar’s suit names a U.K.-registered company called Baton Corporation, which it alleges is the operator of Pump.fun, as well as three of the company’s co-founders — COO Alon Cohen, CTO Dylan Kerler and CEO Noah Tweedale. Cohen declined to comment, telling CoinDesk that he was speaking for himself and not the company. The other members of the team could not be reached by press time. The law firm that filed the suit, New York-based Wolf Popper LLP, filed another class action suit against Pump.fun just two weeks ago. That suit, filed on Jan. 16, has a different lead plaintiff but similarly accuses 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 the suit claims reached a $1 billion market capitalization. At the time of publication, the PNUT token is down 89% from its high of $2.25 last November.Though Pump.fun only launched a year ago, the Solana-based memecoin factory is no stranger to controversy. Last March, the U.K financial regulator issued a warning against the platform, leading Pump.fun to ban U.K.-based users. It also came under fire for its now-disable livestream feature, which allowed some users to promote their tokens with violent or sexual content.On the news team at CoinDesk, Cheyenne focuses on crypto regulation and crime. Cheyenne is originally from Houston, Texas. She studied political science at Tulane University in Louisiana. In December 2021, she graduated from CUNY's Craig Newmark Graduate School of Journalism, where she focused on business and economics reporting. She has no significant crypto holdings.
SECURITIES LAWS PUMP.FUN CLASS ACTION LAWSUIT CRYPTO REGULATION MEMECOINS
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