A cryptocurrency 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, two firms dealing with a separate class action lawsuit brought by investors in December in connection with memecoin introduced by internet personality Haliey Welch, better known as the Hawk Tuah girl, who dropped in value shortly after starting trading. (Welch was not named as a defendant in that lawsuit.)
“These ‘Emperor’s New Clothes’ crypto schemes cannot continue to masquerade as legitimate finance, leaving the vulnerable in the lurch,” says Max Burwick, founding partner at Burwick Law.
Pump.Fun was a success when it launched in January 2024, allowing people to market memecoins – highly volatile cryptocurrencies that typically have no purpose beyond speculation – instantly and for free. The recent lawsuit, filed Thursday in the Southern District of Modern York, accuses Pump.Fun of operating as an unregistered issuer and seller of securities. The complaint alleged marketing claims that downplay the likelihood of losing memecoin in money trading, and that the platform also exposes investors to increased financial risk.
Separately, the lawsuit alleges that memecoin platforms such as Pump.Fun are designed to encourage pump-and-dump activities. “Early investors or insiders artificially inflate token prices through coordinated purchasing and promotional campaigns and then sell their shares at the highest prices, causing the value of the token to decline and leaving later investors with significant losses,” the complaint says.
The complaint points to circumstances surrounding the launch of a specific Pump.Fun memecoin – PNUT, which refers to a famed squirrel euthanized last year in Modern York – to prove its claims.
Pump.Fun did not immediately respond to a request for comment. But last year, in an interview with WIRED, Noah Tweedale, one of three Pump.Fun co-founders named in the lawsuit, rejected the notion that the platform could profit from ordinary investors losing money. “The idea with 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 in any way.”
Above 6 million unique memecoins were launched via Pump.Fun, the the most successful of which are valued at hundreds of millions of dollars. The memecoin market is currently worth over $100 billion in total, market data can be seen.
During the first 12 months of operation Pump.Fun is reported by third parties generated over $350 million in revenue, with a 1 percent reduction in turnover. The platform is on track to reach revenues exceeding $1 billion in 2025.
However, a lawsuit brought by a cryptocurrency investor – following reports of unethical trading activity – criticism related to content moderation, and a warning issued against Pump.Fun by the British financial regulator – could threaten to curb uncontrolled growth.
The lawsuit is based on the assumption that memecoins should, in certain circumstances, be classified as securities, i.e. a special type of investment instrument. The complaint alleges that by failing to register the token sale with the Securities and Exchange Commission (SEC), the relevant U.S. financial regulator, Pump.Fun, allegedly violated securities laws and denied investors disclosures required of regulated entities.