Pump.fun Hit with Class-Action Lawsuit Alleging All Memecoins Are Unregistered Securities

Solana-based memecoin creation platform Pump.fun is facing a proposed class-action lawsuit, alleging that every token it has helped launch constitutes an "unregistered security" and has earned the platform nearly $500 million in fees. The lawsuit, filed on January 30, 2025, in a New York federal court, claims that Pump.fun’s operations have caused significant financial harm to retail investors through "pump-and-dump" schemes and market manipulation.

Allegations of Unregistered Securities and Market Manipulation

The lawsuit, filed by plaintiff Diego Aguilar, accuses Pump.fun, which is reportedly run by the UK-based Baton Corporation, of using aggressive marketing tactics to generate artificial urgency around the sale of highly volatile tokens. These tokens were allegedly marketed in partnership with influencers, resulting in significant losses for retail investors who bought into the hype.

The complaint claims that Pump.fun’s core business model revolves around co-issuing and marketing “unregistered securities,” specifically the memecoins it helps create. The lawsuit likens the platform’s operations to a modern evolution of Ponzi schemes and pump-and-dump tactics. It further names Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale, who are identified as officers of Baton Corporation in official UK records.

Aguilar, who claims to have purchased multiple memecoins from Pump.fun, is seeking relief not only for his own investments but for all tokens offered on the platform, which he refers to collectively as “unregistered security memecoins.” The lawsuit argues that Pump.fun acted as both an issuer and statutory seller, controlling key aspects of each token’s lifecycle—such as its technical infrastructure, liquidity, pricing, and promotional efforts.

Legal Claims and Demands for Relief

The lawsuit alleges violations of the Securities Act and seeks several forms of relief, including:

• Rescission: The reversal of all token purchases made through the platform.

• Monetary damages: Compensation for investors who suffered financial losses.

• Litigation costs: Coverage for the expenses associated with the lawsuit.

Pump.fun and Baton Corporation have not yet responded to requests for comment, and information on their legal representation is currently unavailable.

Previous Legal Challenges

This lawsuit follows previous legal actions targeting Pump.fun. Earlier in January, the U.S. law firm Burwick Law announced that it was taking legal action against the platform on behalf of investors who allegedly lost money due to memecoin "rug pulls" and unfulfilled promises. Burwick Law’s complaint also highlighted disturbing content on the platform, including incidents involving illicit drug use, racism, antisemitism, and other forms of violence and antisocial behavior, which were reportedly displayed during some of the platform’s events.

Surge in Activity and Controversy

Pump.fun has experienced a surge in usage recently, peaking in mid-January 2025 with an all-time high of $3.3 billion in weekly trading volume. This spike in activity was largely driven by the launch of Trump family-themed memecoins, which generated significant buzz and contributed to the platform’s record-breaking figures.

Despite its popularity, Pump.fun’s controversial practices and the growing legal scrutiny surrounding its operations raise questions about the future of the platform and the broader memecoin market. If the court rules in favor of the plaintiffs, it could set a precedent for the regulation of memecoins and other cryptocurrency tokens that fall into a legal gray area.

Looking Ahead

As the legal battle unfolds, the case against Pump.fun could have significant implications for the broader cryptocurrency space, particularly as regulators grapple with how to classify and regulate various types of digital assets. If successful, the lawsuit could force the platform and other similar services to reevaluate their business models and comply with securities laws, ultimately leading to more stringent regulations in the rapidly evolving crypto industry.

For now, investors and platforms alike are closely watching the outcome of the case, as it may shape the future of memecoins and their place in the broader financial landscape.