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Pump.fun Sued for $500M in Unregistered Security Memecoins

Coin WorldFriday, Jan 31, 2025 1:32 am ET

1min read

Solana-based memecoin creation platform Pump.fun has been hit with a proposed class-action lawsuit alleging that every token it helped create is an unregistered security, from which it made nearly $500 million in fees. The suit, filed by Diego Aguilar in a New York federal court on January 30, claims that Pump.fun, allegedly run by the UK-based Baton Corporation, used guerilla marketing to generate artificial urgency for "highly volatile" tokens, resulting in significant losses for retail investors.

The complaint names Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale, all of whom are listed as Baton Corporation's officers on UK Companies House. Aguilar claims he purchased a number of memecoins from Pump.fun but targets all of the tokens on the platform, which are named "unregistered security memecoins." The lawsuit alleges that Pump.fun functioned as an issuer and statutory seller, controlling the token's technical infrastructure, liquidity, pricing, and promotion.

The lawsuit alleges violations of the Securities Act and seeks relief in the form of rescission of all token purchases, monetary damages for affected investors, and litigation costs. Pump.fun and Baton could not be reached for comment, and information on the defendants' lawyers was not immediately available.

In mid-January, US law firm Burwick Law stated that it was taking legal action against Pump.fun, claiming investors had suffered losses from memecoin rug pulls and "unfulfilled promises." The firm stated that Pump.fun had collected hundreds of millions of dollars in fees while displaying illicit drug use, self-harm, racism, antisemitism, lewd acts, bestiality, violent, and other antisocial acts on the platform.

Pump.fun's usage surged over the past week, with $3.3 billion in weekly trading volume following the launch of Trump family memecoins.

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