Crypto investors have brought a class action lawsuit against Pump.Fun, a platform for launching and investing in meme-inspired cryptocurrencies, after suffering trading losses. by investors in December through memecoin opened by the web personality Haliey Welch, better known as Hawk Luck girl, which fell in value immediately after trading started. (Welch was not named as a defendant in the suit.) “These ’emperor’s new clothes’ crypto schemes cannot continue to masquerade as legitimate finance, leaving people vulnerable,” said Max Burwick, founding partner at Burwick Law. Pump .Fun was a hit when it launched in January 2024, giving people a way to launch memecoins—volatile cryptocurrencies that typically have no specific purpose beyond speculation—instantly and at no cost. In a new lawsuit, filed in the Southern District of New York, alleges that Pump.Fun has been operated as an unregistered issuer and seller In making marketing claims that downplay the possibility of losing money memecoins , the complaint alleges, the platform also puts investors at financial risk heightened. Separately, the lawsuit claims that this memecoin platform, like Pump.Fun, is designed in such a way as to encourage pump-and-dump activities “Early investors or insiders artificially inflate the price of tokens through a coordinated buying and promoting campaign, then sell ownership at the peak price, causing the value of the token to collapse and leaving investors later with substantial losses,” claims the complaint. The complaint points to the situation surrounding the launch of a certain Pump.Fun memecoin-PNUT, which refers to a celebrity squirrel euthanized last year in New York-to prove its claims.Pump.Fun did not immediately respond to a request for comment. But in an interview with WIRED last year, Noah Tweedale, one of the three founders of Pump.Fun named in the suit, disputed the idea that the platform was benefiting from ordinary investors losing money. “The idea with Pump is to build something where everyone is on the same playing field,” Tweedale said. “I want to be strict, we don’t want people to lose money on our platform. It doesn’t benefit us in any way. The memecoin market is now worth more than $100 billion in aggregate, market data shows. In the first 12 months of operation, Pump. Fun is reported by third parties to have generated more than $350 million in revenue, taking a 1 percent cut from trading. The platform is on pace to generate more than $1 billion by 2025. However, lawsuits filed by investors crypto-which follows reports of unethical trading activities, criticism related to content moderation, and warnings issued to Pump.Fun by the British Financial Regulator-may threaten to put a dampener on runaway growth. Lawsuits rely on the idea that memecoins should be in some situations are classified as securities, certain types of investment instruments. The complaint alleges that by not registering the sale of tokens with the Securities and Exchange Commission (SEC), the relevant US financial regulator, Pump.Fun allegedly violated securities laws and objecting investors to required disclosures from regulated entities.
