NFT and Meme Token Lawsuits Surge: Investors Sue Nelk Boys, PumpdotFun

The cryptocurrency market has seen a surge in lawsuits against firms and platforms involved in non-fungible token (NFT) projects and meme token sales. Two recent cases highlight the growing legal scrutiny of these ventures.

In a California federal court, Trenton Smith filed a lawsuit on Jan. 29 against Kyle Forgeard, John Shahidi, and their entertainment firms, alleging that the Nelk Boys, a group of YouTubers, failed to deliver on promises made for their NFT project, Metacard. The project raised $23 million but failed to provide the promised business ventures or investment opportunities. Smith claimed that the NFTs, which sold for $2,300 each, held no intrinsic value beyond the promised perks and amenities. The current floor price for a Metacard on OpenSea is 0.034 Ether (ETH), worth approximately $111. Smith is seeking damages, equitable relief, restitution, and disgorgement of funds generated through the NFT sales, as well as attorney's fees.

Just days later, on Jan. 30, Burwick Law and Wolf Popper LLP filed a second federal class action lawsuit against the PumpdotFun platform in the Southern District of New York. The lawsuit alleges that the platform is violating U.S. securities laws by selling unregistered securities disguised as meme tokens. The complaint names multiple defendants, including Baton Corporation Ltd (operating as Pump.fun) and key figures Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale. The lawsuit follows an earlier case filed on Jan. 16 targeting the sale of the Peanut the Squirrel (PNUT) Token. The complaint argues that Pump.fun operates by collaborating with influencers to co-issue and market unregistered securities, representing an evolved form of Ponzi and pump-and-dump schemes. The platform has extracted nearly half a billion dollars in fees from investors.

The broader NFT market has been struggling since 2024, with trading and sales volumes at their lowest levels since 2020. As the market evolves, investors and regulators are increasingly scrutinizing the promises and practices of NFT projects and meme token platforms. These lawsuits serve as a reminder of the potential risks and legal consequences associated with these ventures.