Solana News Today: Pump.fun and Solana-Affiliated Partners Face $4B to $5.5B Meme Coin Gambling Scheme Lawsuit

A class-action lawsuit has been filed in the Southern District of New York, accusing Pump.fun and its Solana-affiliated partners of operating an unlicensed digital casino through a meme coin trading scheme that allegedly generated $4 billion to $5.5 billion in speculative transactions. The amended complaint, led by Burwick Law, alleges violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, fraud, civil conspiracy, and unjust enrichment, framing the platform as a rigged system designed to mimic slot machine mechanics [1]. Pump.fun’s memecoin model, which mass-produces tokens with minimal transparency, is accused of exploiting retail investors through aggressive marketing and high-frequency trading strategies. Plaintiffs argue the platform lacks investor protections, comparing its operations to a “front-facing slot machine cabinet” that incentivizes risky behavior [1].

The lawsuit implicates Solana Labs, the Solana Foundation, Jito Labs, and the Jito Foundation as active participants in monetizing the scheme. Solana’s infrastructure is alleged to have profited via blockspace fees and SOL token appreciation tied to Pump.fun’s trading volume, while Jito is accused of facilitating front-running through maximal extractable value (MEV) tools and validator control [1]. The complaint rejects the notion that these entities acted as neutral infrastructure providers, asserting they directly benefited from the platform’s operations. Pump.fun’s rapid rise—reaching a $2 billion market cap after a $600 million token launch—is highlighted as a catalyst for exploiting retail users [1].

Market reactions reflect growing unease. Two major early investors, “PUMP Top Fund 1” and “Top Fund 2,” recently moved $160 million in PUMP tokens to exchanges, triggering a sell-off. BitMEX data shows nearly 60% of presale participants have liquidated their holdings, exacerbating price volatility despite initial surges [1]. Pump.fun’s ICO raised $500 million in 12 minutes, underscoring the speculative frenzy now facing regulatory scrutiny. Legal experts note the case’s potential to redefine liability for blockchain infrastructure providers, with Andrew Rossow of AR Media Consulting warning that “permissionless” systems may not shield entities from accountability if they enable illicit activities [1].

The legal claims raise broader questions about decentralized finance’s regulatory boundaries. While the U.S. legal system allows broad initial allegations, the defendants—including Pump.fun, Solana Labs, and Jito—have yet to respond. If successful, the case could set a precedent for holding infrastructure providers liable for activities on their networks, challenging the decentralized ethos of blockchain. The lawsuit also underscores the risks inherent in speculative token ecosystems, where opaque governance and high volatility often precede instability.

The case’s outcome may influence future regulatory frameworks for memecoin projects and crypto infrastructure, particularly as courts grapple with balancing innovation and investor protection. Plaintiffs emphasize the systemic harm caused by unregulated trading platforms, arguing that the alleged scheme’s structure—resembling a digital casino—warrants stringent oversight. The legal battle highlights the tension between technological advancement and accountability, with implications extending beyond Pump.fun to the broader crypto industry [1].

Source:

[1] [Decrypt: Solana, Pump.fun Named in Amended RICO Suit Alleging $5.5B Meme Coin Gambling Scheme](https://decrypt.co/331528/solana-pump-fun-amended-rico-suit-alleging-meme-coin-gambling)