Class Action Lawsuit Targets Pump.Fun Over Memecoin Trading Losses
A crypto investor has filed a class action lawsuit against Pump.Fun, a popular platform for launching and investing in meme-inspired cryptocurrencies, after experiencing significant trading losses. The plaintiff is represented by Wolf Popper and Burwick Law, the same firms that handled a previous class action lawsuit against a memecoin launched by internet personality Haliey Welch, known as Hawk Tuah. The lawsuit alleges that Pump.Fun operated as an unregistered securities issuer and seller, misleading investors about the risks associated with trading memecoins.
Allegations of Pump-and-Dump Schemes and Unethical Practices
The lawsuit accuses Pump.Fun of incentivizing pump-and-dump activities, where early investors artificially inflate token prices through coordinated buying and promotional efforts, only to sell at peak prices and cause the token’s value to plummet, resulting in losses for later investors. The complaint specifically references the launch of a memecoin on Pump.Fun called PNUT, which alludes to a celebrity squirrel euthanized in New York last year, as evidence of these allegations.
In response to these accusations, Pump.Fun has not issued a comment. However, Noah Tweedale, one of the platform’s co-founders named in the lawsuit, previously stated in an interview with WIRED that Pump.Fun aims to create a level playing field for all users and does not benefit from investors losing money. Despite this, the lawsuit raises concerns over the platform’s practices and potential impact on investors.
Impact on Memecoin Market and Pump.Fun’s Revenue
Pump.Fun has facilitated the launch of over 6 million unique memecoins, some of which are valued at hundreds of millions of dollars. The memecoin market as a whole is now valued at over $100 billion, with Pump.Fun generating more than $350 million in revenue within its first year of operation. The platform’s revenue is projected to exceed $1 billion in 2025.
Despite its financial success, Pump.Fun has faced criticism over unethical trading practices, content moderation issues, and regulatory warnings. The recent class action lawsuit adds to the challenges the platform is confronting, as it questions the classification of memecoins as securities and alleges violations of securities laws by failing to register token sales with the SEC.
As the legal battle unfolds, the future of Pump.Fun and the memecoin market hangs in the balance, with potential implications for investors and the broader cryptocurrency industry.