Pump.fun, a token launch platform built on the Solana blockchain, is currently embroiled in a federal class action lawsuit. The lawsuit, filed by Pump.fun user Diego Aguilar in the U.S. District Court for the Southern District of New York, alleges that the platform was involved in a scheme to issue and promote unregistered securities, in violation of U.S. securities laws. The lawsuit names Baton Corporation Limited, the entity behind Pump.fun, as well as its founders – Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale.
Aguilar, represented by Burwick Law, claims that Pump.fun operated a pump-and-dump scheme that resulted in nearly $500 million in fees generated through the promotion and sale of unregistered securities. Despite these serious allegations, Pump.fun has not yet issued a public response to the lawsuit.
The lawsuit alleges that Pump.fun collaborated with influencers to drive interest in its tokens, creating what Aguilar describes as an “evolution of Ponzi and pump-and-dump schemes.” The platform used aggressive marketing tactics to give the appearance of legitimacy while engaging in activities that violated federal securities laws. Pump.fun used a standardized token infrastructure for all memecoins launched on its platform, including a proprietary bonding curve mechanism to determine token pricing based on demand. This structure, according to the lawsuit, classified these tokens as unregistered securities under federal law.
Additionally, the lawsuit alleges that Pump.fun lacked basic investor protections such as Know Your Customer verification and anti-money laundering protocols, enabling minors to invest in speculative assets without oversight. Furthermore, the platform was accused of launching tokens that promoted antisemitism, racism, and explicit content.
The lawsuit details how Pump.fun promoted tokens like FRED, FWOG, and GRIFFAIN as investment opportunities through influencer campaigns and exchange listings. The platform used high-quality artwork and aggressive promotion to market FRED, securing multiple exchange listings and a strong social media presence. FWOG was positioned as a competitor to other successful memecoins, leveraging social media hype to drive trading volume. GRIFFAIN was purported to be part of an AI-powered trading system, with misleading claims of automated profit generation.
This lawsuit is the third legal action taken against Pump.fun in recent months, following previous lawsuits related to the PNUT and HAWK tokens. The case raises questions about the legality of token launch platforms and their responsibility in facilitating speculative investments. Aguilar and his legal team are seeking a jury trial to pursue damages and further regulatory scrutiny of Pump.fun’s business practices.
