Pump. fun was accused of trading in unregistered securities

What’s new? A group of investors has filed a class action lawsuit in New York federal court against meme token launchpad Pump. fun on the Solana network for alleged securities law violations. According to the lawsuit, all tokens created on the platform are unregistered securities, on which the Pump. fun team has made about $500 million in fees.

Court documents

What else is known? The lawsuit, filed on behalf of investor Diego Aguilar, alleges that the platform, allegedly operated by the UK-based Baton Corporation, used so-called guerrilla marketing tactics to create artificial demand for “highly volatile” tokens, resulting in significant losses for retail investors.

“Pump.Fun’s core function is to work alongside influencers to co-issue and market unregistered securities. Inherent to its operations are a novel evolution in Ponzi and pump-and-dump schemes,” the document reads.

According to the plaintiffs, Pump.fun acts as an issuer and legitimate seller, controlling the technical infrastructure of tokens, their liquidity, pricing, and promotion. They are seeking damages from the platform in the form of canceling all token purchases, paying monetary compensation to affected investors, and covering legal fees.

The lawsuit names Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale as Baton Corporation officials, according to the U.K. regulator.

Earlier this month, US law firm Burwick Law also said it was filing a lawsuit against Pump.fun. It alleges that investors suffered losses as a result of the token creators’ unfulfilled promises and implementation of Rug Pull fraud schemes.

“In the past few months, Pump.fun has collected hundreds of millions of dollars in fees while illicit drug use, self-harm, racism, antisemitism, lewd acts, bestiality, violent and other antisocial acts were displayed on the platform,” Burwick Law lawyers noted.

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The plaintiffs believe that disclosing the risks of investing in the asset would have saved them from substantial financial loss

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At issue is the period when the platform late last year allowed token creators to launch streams to promote their projects. However, the feature was quickly shut down indefinitely due to scandals over thrash content: some token creators streamed animal abuse, and adult content, or even threatened suicide to raise the capitalization of their assets.

Pump.fun said it would resume broadcasts only after the moderation system was updated, but even then experts warned that the incidents could lead to serious lawsuits against the platform.

After the launch of meme tokens of Trump and his wife, activity on Pump.fun increased dramatically, with weekly trading volume hitting a high of $3,3 billion. Pump.fun is the largest meme token creation platform on the Solana network. It allows users without technical knowledge to launch their own assets in a few clicks for a small fee.