It seems that Pump.fun, the platform famous for launching meme coins on Solana, is finding itself in deeper trouble. A second lawsuit has been thrown its way, accusing the platform of engaging in fraudulent activities and breaching U.S. securities laws.
This new legal action adds to the growing scrutiny that meme coin projects face, especially those suspected of being pump-and-dump schemes.
Fresh Legal Battle Over Securities Laws
A class-action lawsuit, brought forth by Burwick Law and Wolf Popper LLP, claims that Pump.fun has been distributing unregistered securities under the guise of meme coins. The complaint suggests that the platform misled investors into purchasing tokens of little intrinsic value, benefiting insiders at investors’ expense. It underscores the regulatory challenges around meme coin platforms and whether they should be subject to securities laws.
Burwick Law and @WolfPopperLLP have initiated a second federal class action lawsuit on behalf of investors against PumpdotFun. Full complaint available below.
— Burwick Law (@BurwickLaw) January 30, 2025
The legal team contends that Pump.fun’s business model mirrors traditional financial fraud tactics. By enabling the swift creation and trading of meme coins, the platform allegedly supports schemes that favor early investors while later ones bear the losses. This lawsuit follows an earlier one against Pump.fun for similar issues, suggesting a pattern of legal confrontations for the company.
Insights from Regulators and Industry Experts
As this situation unfolds, regulators and legal experts are keeping a close watch, drawing parallels between this platform’s model and multi-level marketing scams. Max Burwick, founder of Burwick Law, has been outspoken about the potential dangers of meme coin platforms, emphasizing that they operate in a legal gray area that will likely be subject to stricter enforcement soon.
With impending legal announcements, I want to make my personal position on the exploitation of memecoins widely available. Read it below. Please feel free to share!
— Max Burwick (@burwick_max) January 15, 2025
The crypto market’s goal of curbing illegal financial activities places significant pressure on platforms like Pump.fun to comply with legal standards. Advocacy groups for investor protection are calling for clearer regulations around meme coins and their classification under securities law. If Pump.fun is found guilty of selling unregistered securities, it could pave the way for new benchmarks affecting other crypto platforms.
Meme Coins: Just Hype or Market Manipulation?
The lawsuit also touches on the broader discussion around meme coins. While some see them as the fun side of the crypto market, others warn that they open doors to widespread market manipulation. Meme coins experience dramatic price swings, often resulting in heavy losses for late investors. Critics argue that platforms like Pump.fun thrive on generated hype rather than intrinsic value.
Featured image from CCN, chart from TradingView
