Pump.fun Faces Lawsuit Over Alleged Pump-and-Dump Schemes

• A lawsuit claims Pump.fun and Solana executives engaged in a pump-and-dump scheme by exploiting retail investors and using Solana's prioritization system.
• Pump.fun's co-founder admitted in private messages that most investors lose money on the platform, attributing it to the high risk of low-cap crypto assets.
• A wallet linked to Pump.fun deposited $148 million in USDC and USDT into Kraken, adding to ongoing discussions about treasury management and transparency.

A refiled lawsuit by Burwick Law accuses Pump.fun and Solana executives of creating a 'rigged, unlicensed gambling operation,' citing 5,000 private messages that allegedly show coordination between Solana and Pump.fun engineers. The lawsuit includes claims that executives and insiders used the platform to front-run retail investors by leveraging transaction prioritization features, and that crypto influencers were paid to promote tokens without disclosing their interests.

Pump.fun has defended the large stablecoin transfers as routine treasury management, including diversification and preparation for reinvestment. The recent $148 million deposit to Kraken is the latest in a series of multi-figure moves involving USDC and USDT since November 2025.

The legal case could pose significant short-term risks to Solana, as the chain is accused of enabling Pump.fun's activities through its infrastructure. The lawsuit includes allegations of racketeering and insider trading, with a court decision expected later in the month.

Is the Pump.fun platform a risk to investors?

The lawsuit highlights concerns about the platform's lack of guardrails for retail participation and its alleged facilitation of high-risk trading. Pump.fun's co-founder Alon Cohen admitted that most investors lose money, and the platform was criticized for making it easy for ordinary people to trade small coins with extremely low probabilities of profit.

The platform is also accused of coordinating with crypto influencers to promote tokens and execute sell-offs on predetermined schedules. These practices, if proven, could expose the platform to regulatory scrutiny and reputational damage.

What are the implications for Solana and the broader crypto market?

The ongoing lawsuit could have broader implications for Solana and the crypto ecosystem, particularly as it relates to transparency and governance. While Solana's investment thesis is supported by tokenized real-world assets and the approval of Solana ETFs, the legal challenges involving Pump.fun remain a key risk.

Pump.fun has taken steps to de-risk its treasury, transferring $436.5 million in USDC to Kraken and selling $757 million in SOL between May 2024 and August 2025. These moves signal a shift in strategy amid a slowdown in memecoin trading and a decline in weekly revenue to $39.22 million.

Market observers are watching closely for any additional treasury movements and the legal outcomes of the lawsuit. The recent transfer to Kraken, while not directly tied to the case, has raised fresh questions about transparency and governance within the platform.

What does the future hold for Pump.fun and its investors?

The outcome of the lawsuit could have a significant impact on Pump.fun's operations and investor sentiment. The platform has faced criticism for its previous fee structure and slower revenue growth compared to peak memecoin trading periods.

Pump.fun recently announced a new strategy to shift incentives from volume-driven token launches to traders and liquidity. The effectiveness of this strategy and the platform's ability to maintain trust among its user base will be key factors in determining its long-term viability.

Investors are advised to remain cautious as the situation unfolds, with the legal and onchain developments potentially influencing the platform's future and broader market perceptions of Solana-based projects.