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Thursday saw the filing of a proposed class action lawsuit against Baton Corporation, the entity behind Pump.fun, in the Southern District of New York Court. The lawsuit, initiated by plaintiff Diego Aguilar, accuses Pump.fun of selling "highly-volatile" unregistered securities and making close to $500 million from fees, in violation of U.S. securities laws.
The legal complaint alleges that all tokens generated on the Pump.fun platform are securities and should be subject to U.S. securities regulations. Pump.fun, along with its three founders, Alon Cohen, Dylan Kerler, and Noah Tweedale, are named in the lawsuit for their role in co-issuing and marketing these unregistered securities, which the plaintiff characterizes as a modern twist on Ponzi and pump-and-dump schemes.
Aguilar claims he incurred losses from investing in three memecoins created on Pump.fun—FRED, FWOG, and GRIFFAIN. These tokens were purportedly marketed with the promise of "exponential" returns. The lawsuit suggests that Pump.fun specifically targeted a younger, less experienced demographic, using social media campaigns to play on the "fear of missing out" and promising outsized returns.
The plaintiff further argues that Pump.fun’s operations facilitated pump-and-dump schemes by providing necessary infrastructure while failing to implement investor safeguards, such as know-your-customer and anti-money laundering protocols.
This legal action is not the first to target Pump.fun. The platform, which has been operational for a year and allows users to launch memecoins on the Solana network, is already facing two other class action lawsuits. These lawsuits, also facilitated by Wolf Popper LLP and Burwick Law, involve the PNUT and HAWK tokens. Earlier this month, Burwick Law reached out to Pump.fun users who have suffered losses, urging them to join the lawsuit.
Despite the pending litigation, Pump.fun has continued to generate significant revenue. In January, the platform reported earnings of $116.72 million in fees, based on data from The Block’s dashboard.
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