Pump.Fun is in hot water, after the platform just got slapped with a class action lawsuit.
The company and its top brass are accused of putting investors at serious financial risk and raking in nearly $500 million in fees by peddling unregistered and wildly volatile memecoins.
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Securities laws
Diego Aguilar, one of the plaintiffs shared that Pump.Fun is allegedly playing a dangerous game that mixes Ponzi schemes with classic pump-and-dump tactics.
At the heart of this legal drama is the age-old question in crypto, as when does a token become a security?
Aguilar argues that all tokens associated with Pump.Fun should be classified as securities, which means they need to follow US securities laws.
Aguilar decided to take action after losing his shirt trading memecoins like FWOG, FRED, and GRIFFAIN on Pump.Fun’s platform.
He claims the company isn’t just a passive player, but it’s orchestrating this whole scheme by providing automated tools that let anyone whip up and sell nearly worthless digital tokens in mere minutes.
So basically, he’s saying Pump.Fun is a “joint issuer” of all those tokens flying off their platform.
Person of interest
Aguilar isn’t going after just any old entity, he’s targeting Baton Corporation and three of its founders, COO Alon Cohen, CTO Dylan Kerler, and CEO Noah Tweedale. So far, none of the founders have responded to the lawsuit.
This legal mess comes just two weeks after another lawsuit hit Pump.Fun for selling unregistered securities. Both cases were filed by the New York law firm Wolf Popper LLP but are led by different plaintiffs.
The earlier suit specifically calls out the PNUT token, the Solana-based memecoin inspired by Peanut the Squirrel, as an unregistered security that Baton and its founders are still selling.
New era for crypto?
On the other hand, the regulatory environment for cryptocurrencies might be shifting under our feet.
With Donald Trump back in the political spotlight, the SEC has set up a task force to create clearer rules for crypto assets.
Led by crypto advocate Commissioner Hester Peirce, this team wants to work with the crypto community to develop better regulations, so this could mean big changes ahead.
Many in the crypto world have felt that previous SEC leadership wasn’t exactly friendly towards crypto innovation. But with Trump promising a more accommodating environment, there’s hope that some legal battles could even be dropped.
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