Author: Cheyenne Ligon, CoinDesk; Compiler: Deng Tong, Golden Finance
Summary
Pump.fun has been hit with another class action lawsuit alleging that the company violated securities laws.
The lawsuit alleges that all tokens created using the Pump.fun platform are securities.
The law firm that filed the lawsuit also filed two other class actions against Pump.fun - one on behalf of buyers of PNUT and the other on behalf of buyers of HAWK.
On Thursday, Memecoin generator Pump.fun was hit with another class action lawsuit, which accuses the company and its executives of violating U.S. securities laws and collecting nearly $500 million in fees.
The lawsuit, filed in the Southern District of New York (SDNY), centers around the crypto industry’s biggest unresolved question — when is a token considered a security? While the lawsuit alleges that every token created using the Pump.fun platform is a security and therefore subject to U.S. securities laws, that’s far from a settled legal issue. Under the new Donald Trump administration, the U.S. Securities and Exchange Commission (SEC) has said it’s shifting its crypto regulatory strategy, creating a new crypto task force tasked with establishing a clear regulatory framework for the industry.
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Diego Aguilar, the lead plaintiff in Thursday’s lawsuit, claims he lost money trading three memecoins created by Pump.fun: FWOG, FRED, and GRIFFAIN. Although Pump.fun itself did not create any of the tokens involved in the lawsuit, the lawsuit alleges that the company “orchestrated the scheme by providing automated tools that enabled anyone to create and sell virtually worthless digital tokens in minutes,” thus qualifying as a “joint issuer” of all tokens launched on its platform.
Aguilar’s lawsuit names a U.K.-registered company called Baton Corporation, which it claims is the operator of Pump.fun, as well as the company’s three co-founders — COO Alon Cohen, CTO Dylan Kerler and CEO Noah Tweedale.
The law firm that filed the lawsuit, New York-based Wolf Popper LLP, filed another class-action lawsuit against Pump.fun two weeks ago. The lawsuit, filed on Jan. 16 with a different lead plaintiff but the same accuses Baton Corporation and its three co-founders of selling unregistered securities — PNUT tokens, a Solana-based memecoin inspired by Peanut the Squirrel, which the lawsuit claims has a market cap of $1 billion. As of publication, PNUT tokens have fallen 89% from their high of $2.25 last November.
Wolf Popper LLP, as well as crypto litigation-focused law firm Burwick Law, also recently filed a class-action lawsuit against the originators of the HAWK token, a memecoin associated with influencer Hailey Welch, aka Hawk Tuah.
This is despite Pump.fun launching just a year ago. Last March, the U.K. financial regulator issued a warning about the platform, leading Pump.fun to ban U.K. users. The platform has also come under fire for its now-disabled live-streaming feature, which allowed some users to promote their tokens with violent or pornographic content.