A class action lawsuit has been filed against by a crypto investor Pump.Funa platform to launch and invest in meme-inspired cryptocurrencies, after suffering trading losses.
The plaintiffs are represented by Wolf Popper and Burwick Law, two firms handling the case separate collective action was launched by investors in December via a memecoin launched by web personality Haliey Welch, better known as Hawk Tuah girl, collapse in value immediately after trading begins. (Welch is not named as a defendant in that lawsuit.)
Max Burwick, founding partner at Burwick Law, said: “These 'emperor's new clothes' cryptocurrency schemes cannot continue to masquerade as legitimate finance, leaving vulnerable people in the lurch. into a difficult situation”.
Pump.Fun was successful when it launched in January 2024, giving people a way to launch memecoins—highly volatile cryptocurrencies that often have no inherent purpose beyond speculation—right away. Instantly and for free. The new lawsuit, filed Thursday in the Southern District of New York, alleges that Pump.Fun acted as an issuer and seller of unregistered securities. In making marketing claims that reduced the possibility of losing money when trading memecoins, the complaint alleges that the platform also exposed investors to greater financial risk.
Separately, the lawsuit alleges that these memecoin platforms, like Pump.Fun, are designed in a way that encourages pump-and-dump activity. “Early investors or insiders artificially inflated token prices through coordinated purchasing and promotional campaigns, then sold their holdings in peak price, causing the value of the token to decline and causing subsequent investors to suffer significant losses.”
The complaint points to the circumstances surrounding Pump.Fun's launch of a specific memecoin—PNUT, referring to the famous squirrel that was euthanized last year in New York—as evidence of its claim. me.
Pump.Fun did not immediately respond to a request for comment. But in an interview with WIRED last year, Noah Tweedale, one of three Pump.Fun co-founders named in the lawsuit, dismissed the idea that the platform would benefit from Regular investment losses. “The idea of Pump was to build something where everyone was on the same playing field,” Tweedale said. “I want to emphasize, we don't want people to lose money on our platform. It doesn't benefit us at all.”
Than 6 million unique memecoins was launched through Pump.Fun, which were the most successful are all worth hundreds of millions of dollars. The memecoin market currently has a total value exceeding $100 billion, market data shows.
During its first 12 months of operation, Pump.Fun was reported by third parties generated more than $350 million in revenue, a 1% transaction cut. The platform is on track to achieve more than $1 billion in revenue by 2025.
However, the lawsuit brought by cryptocurrency investors follows reports about unethical trading activities, criticize regarding content moderation and warning issued by the UK financial regulator against Pump.Fun—which could threaten to slow its rapid growth.
The lawsuit revolves around the idea that memecoins should in some cases be classified as securities, a specific type of investment instrument. The complaint alleges that by failing to register the token sale with the Securities and Exchange Commission (SEC), the relevant US financial regulator, Pump.Fun allegedly violated securities laws and Refusal to provide information to investors as requested by regulated entities.