Pump.fun Faces $5.5 Billion Lawsuit, Token Drops 14.026%

Pump.fun's latest price was $0.002649, down 14.026% in the last 24 hours. The team behind the memecoin platform Pump.fun is facing an expanded class-action lawsuit that accuses it of operating a digital asset scheme resembling a rigged slot machine, extracting more than $5.5 billion from users. The amended complaint, filed in the Southern District of New York, names the platform’s pseudonymous developer “Bernie,” its parent company Baton Corp., and several infrastructure partners. The lawsuit claims Pump.fun ran an “unlicensed casino”-style operation that used hype and rapid token cycles instead of disclosures or investor protections. The structure mimics a rigged slot machine where the first few players win by dumping their tokens on later ones. There is no underlying project, product, or revenue — only a fast-moving cycle of buying, dumping, and collapse. The updated filing adds a range of new charges, including violations under the Racketeer Influenced and Corrupt Organizations Act (RICO), fraud, aiding and abetting, civil conspiracy, and unjust enrichment. Plaintiffs are seeking to cancel all Pump.fun transactions and recover damages. The legal action comes amid growing skepticism around Pump.fun’s token economics. Two of its largest early investors — dubbed “PUMP Top Fund 1” and “Top Fund 2” — transferred over $160 million worth of PUMP tokens to exchanges, triggering concerns about a wider sell-off. Pump.fun raised roughly $500 million in its ICO earlier this year, selling out in just 12 minutes. Its token has since faced heavy selling pressure, with analysts citing the size of the early unlock as a drag on price. The lawsuit, filed in the United States District Court for the Southern District of New York, targets the Pump.fun operator, Baton Corporation, its founders Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale. Plaintiffs Diego Aguilar, Kendall Carnahan, and Michael Okafor allege the defendants formed a “Pump Enterprise” that operates as a coordinated racketeering scheme under the Racketeer Influenced and Corrupt Organizations Act. The complaint describes Pump.fun as the “front-facing slot machine cabinet” where users deposit SOL currency for unpredictable token outcomes. The platform allegedly allows minors to engage in speculative trading without requiring age verification or Know Your Customer (KYC) screening. The platform faces additional allegations of facilitating intellectual property theft, including tokens that impersonate publicly traded companies like Apple, Tesla, and Meta, as well as celebrity names without authorization. The Lazarus Group, a sanctioned cybercrime unit, allegedly used Pump.fun to launder $1.08 million from cryptocurrency theft. According to a report, Pump.fun was accused of extracting $741 million in fees from users since May 2024. Meanwhile, 99.6% of its 13.55 million trader addresses have failed to realize profits exceeding $10,000. The platform collects a 1% transaction rake on every trade and recently introduced a 0.05% revenue-sharing model for token creators. Court documents reveal Pump.fun earned over $400 million in fee revenue during 2024 alone from the alleged gambling enterprise. The lawsuit identifies 20 specific “Pump Tokens” as unregistered securities, including StakeCoin, QuStream, DeepCore AI, and Apex AI. These tokens allegedly promised “real-world utility and value tied to future project success” without SEC registration or risk disclosures. Lead plaintiff Michael Okafor lost approximately $242,076 when his purchased tokens collapsed. The platform processes over $66 billion in cumulative trading volume while launching an estimated 27,305 new tokens daily. Pump.fun’s native PUMP token launched in July 2025 but crashed 30% within 24 hours from pre-market highs of $0.0072 to $0.005 amid aggressive whale shorting. The token has lost nearly 50% of its value since launch, falling short of community expectations. Founder Alon Cohen confirmed during a recent livestream that no immediate token airdrop is planned, causing PUMP to drop over 14% in 24 hours. The token currently trades at $0.0031, with multiple presale investors dumping their positions due to losses exceeding $1 million. X platform suspended Pump.fun’s official account and Cohen’s personal account in June 2025, raising questions about potential SEC investigations or securities law violations. The platform has also faced multiple lawsuits alleging violations for selling unregistered securities disguised as meme tokens. Competitor LetsBonk has captured a sizable market share, achieving a daily share of 44.87% compared to Pump.fun’s 43.73%. Plaintiffs seek class certification, compensatory damages, treble damages under RICO violations, appointment of a federal equity receiver, and permanent injunctions preventing defendants from operating similar platforms without required licenses and compliance controls.