A crypto investor has filed a class action lawsuit against Pump.Fun, a platform for launching and investing in meme-inspired cryptocurrencies, after suffering trading losses.
The plaintiffs are represented by Wolf Popper and Burwick Law, the two firms handling a separate class action brought by investors in December on a memecoin launched by web personality Haliey Welch, better known as Hawk Tuah girl, who collapsed in value shortly after the start of the exchanges. (Welch has not been named as a defendant in this suit.)
“These ‘Emperor’s New Clothes’ crypto schemes cannot continue to masquerade as legitimate finance, leaving vulnerable people in the lurch,” says Max Burwick, founding partner of Burwick Law.
Pump.Fun was successful when it launched in January 2024, providing users with a way to launch memecoins, highly volatile cryptocurrencies that typically have no inherent purpose beyond speculation, instantly and with no fees . The new lawsuit, filed Thursday in the Southern District of New York, alleges that Pump.Fun operated as an issuer and seller of unregistered securities. By making marketing claims downplaying the likelihood of losing money while trading memecoins, the complaint claims, the platform also exposes investors to increased financial risk.
Furthermore, the lawsuit alleges that these memecoin platforms, like Pump.Fun, are designed in a way to encourage pump and dump activities. “Early investors or insiders artificially inflate token prices through coordinated buying and promotional campaigns, then sell their holdings at the highest prices, causing the token value to collapse and leaving later investors with substantial losses,” the complaint alleges.
The complaint points to the circumstances surrounding the launch of a particular Pump.Fun memecoin – PNUT, which references the famous 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 three Pump.Fun co-founders named in the suit, refuted the idea that the platform benefits from losing regular investors’ money. “The idea with Pump was to build something where everyone would be on the same playing field,” Tweedale said. “I want to emphasize that we don’t want people to lose money on our platform. This does not benefit us in any way.
More than 6 million unique memecoins were launched via Pump.Fun, the of which the most successful are valued at hundreds of millions of dollars. The memecoin market is now worth over $100 billion in total, market data watch.
During its first 12 months of operation, Pump.Fun is reported by third parties having generated more than $350 million in revenue, reducing transactions by 1 percent. The platform is on track to generate more than $1 billion in revenue in 2025.
However, the lawsuit filed by the crypto investor, which followed reports of unethical trading activities, critical relating to content moderation, and a warning issued against Pump.Fun by the UK financial regulator – could threaten to curb rampant growth.
The lawsuit is based on the idea that memecoins should, under certain circumstances, be classified as securities, a special type of investment instrument. The complaint claims that by failing to register token sales with the Securities and Exchange Commission (SEC), the applicable U.S. financial regulator, Pump.Fun allegedly violated securities laws and denied investors required information from regulated entities.
