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The woes for Pump.fun, the platform that allows the launch of meme coins on Solana, keep piling. A second lawsuit has been filed against the platform, claiming it engages in fraudulent activities and violated US securities laws.
This development joins the list of growing scrutiny against meme coin projects, especially those accused of being pump-and-dump schemes.
New Lawsuit Alleges Securities Violations
The class-action complaint, filed by Burwick Law and Wolf Popper LLP, alleges that Pump.fun has been peddling unregistered securities masquerading as meme coins.
In the complaint, it is alleged that the company misled investors into buying the tokens which had little to no intrinsic value to insiders who profited at their expense. It raises a host of regulatory questions regarding meme coin platforms – whether or not they fall under the jurisdiction of securities laws.
**LAWSUIT ALERT**
Burwick Law and @WolfPopperLLP have filed a second federal class action lawsuit on behalf of investors against the PumpdotFun platform.
Full complaint available below.
— Burwick Law (@BurwickLaw) January 30, 2025
The legal team behind the lawsuit argues that Pump.fun’s operations resemble classic financial fraud tactics. By allowing rapid creation and trading of meme coins, the platform may have facilitated schemes where early investors benefit at the cost of later entrants.
This lawsuit follows a previous legal action that targeted Pump.fun for similar reasons, indicating a pattern of legal challenges for the platform.
Regulators And Experts Weigh In
Legal experts and regulators closely follow the development of the situation, with some using a comparison between the model of the given platform and multi-level marketing scams.
The founder of Burwick Law, Max Burwick, has been vocal concerning the various risks involved in meme coin platforms, stating that they fall within a gray area where upcoming enforcement will be much strict.
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! pic.twitter.com/adndcQNRxH
— Max Burwick (@burwick_max) January 15, 2025
The crypto market aims to reduce illegal financial activities, so platforms like Pump.fun may face a lot of pressure to follow current laws.
Investor protection groups have also sought clearer rules about meme coins and their status and classification under securities law. If Pump.fun is found guilty of selling unregistered securities, it could set a standard for other crypto sites.
Hype Or Market Manipulation Of Meme Coin?
The lawsuit also points to a more general issue: the debate about meme coins. To some, these are the lighter, fun aspects of the crypto market. However, to others, they create a pathway to mass manipulation in the markets.
Meme coins often see extremely rapid rises and falls, leading to massive losses for late investors, with critics saying that places like Pump.fun live off of artificial hype instead of value.
Featured image from CCN, chart from TradingView
