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Pump.fun Slammed with Class Action Over Unregistered Meme Coins

Coin WorldFriday, Jan 31, 2025 3:40 am ET

1min read

Pump.fun Faces Class Action Lawsuit Over Allegations of Unregistered Securities and Risky Meme Coin Trading Practices

On January 30, a class action lawsuit was filed in the Southern District of New York, accusing the operators of Pump.fun of violating US securities laws. The lawsuit, filed by lead plaintiff Diego Aguilar, alleges that Pump.fun promoted and sold unregistered securities. The complaint targets UK-based Baton Corporation Ltd, which it claims operates Pump.fun, and its co-founders. According to the complaint, they offered tokens without proper registration with the US Securities and Exchange Commission (SEC).

The lawsuit argues that Pump.fun is “exercising comprehensive control over their creation, distribution, and ongoing operations,” making it a “joint issuer.” This apparently makes it a “joint issuer.”

Diego Aguilar, the lead plaintiff, claims he lost money trading three specific meme coins created on Pump.fun — FWOG, FRED, and GRIFFAIN. Through this case, Aguilar and other affected investors seek redress for their financial losses.

The lawsuit also highlights Pump.fun’s role in creating a speculative and manipulative trading environment. The platform uses gamified features to encourage the trading of highly volatile and risky meme coins. The complaint argues that these features make it easier for users, sometimes even minors, to create and trade tokens without the protections typically required in securities transactions.

The complaint argues that Pump.fun minimized or omitted crucial investor protections, such as: Know Your Customer (KYC) verification; Anti-Money Laundering (AML) compliance; age verification requirements; and risk disclosures trading limits or other protective mechanisms.

Moreover, the suit claims that Pump.fun’s operations are tied to a range of fraudulent practices, including “pump and dump” schemes. In these schemes, insiders artificially inflate the price of tokens through coordinated promotional efforts. They then sell off the holdings at inflated prices, leaving later investors with significant losses.

Pump.fun has also faced similar lawsuits before. Burwick Law recently sued Pump.fun on behalf of investors who lost money on failed meme coins and other questionable projects.

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