A crypto investor has filed a class action lawsuit against Pump. Funplatform to launch and invest in meme-inspired cryptocurrencies, after suffering trading losses.
The plaintiffs are represented by Wolf Popper and Burwick Law, two firms engaged in a separate class action brought by investors in December for the memecoin launched by web personality Haliey Welch, better known as the Hawk Tuah girl, who collapsed in value shortly after the start of trading. (Welch was not named as a defendant in that suit.)
“These ’emperor’s new clothes’ crypto schemes cannot be disguised as legitimate financing, leaving the vulnerable in the lurch,” says Max Burwick, founder of Burwick Law.
Pump.Fun was a hit when it launched in January 2024, giving people a way to launch memecoins — highly volatile cryptocurrencies that typically have no inherent purpose other than speculation — instantly and at no cost. The new lawsuit, filed Thursday in the Southern District of New York, alleges that Pump.Fun acted as an unregistered issuer and seller of securities. By making marketing claims that downplayed the likelihood of losing money trading memecoins, the complaint said, the platform also exposed investors to increased financial risk.
Separately, the lawsuit alleges that these memecoin platforms, like Pump.Fun, are designed in such a way as to encourage pump-and-dump activity. “Early investors or insiders artificially inflate token prices through coordinated buying and promotional campaigns, then sell their holdings at peak prices, causing the token’s value to decline and leaving later investors with substantial losses,” the complaint alleges.
The complaint points to the circumstances surrounding the launch of a certain memecoin Pump.Fun—PNUT, which refers to a famous squirrel euthanized last year in New York—as proof of 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 the three co-founders of Pump.Fun named in the lawsuit, refuted the idea that the platform could benefit from regular investors losing money. “The idea with Pumpa was to build something where everyone is on the same playing field,” Tweedale said. “I want to emphasize that we do not want people to lose money on our platform. It does us no good at all.”
More than 6 million unique memecoins are launched through Pump.Fun, the of which the most successful are estimated at hundreds of millions of dollars. The memecoin market is now worth more than $100 billion in total, market data shows.
In the first 12 months of operation, Pump.Fun is reported by third parties that it generated more than $350 million in revenue, taking a 1 percent cut of turnover. The platform is on track to generate more than $1 billion in revenue in 2025.
However, a lawsuit filed by a crypto investor—following reports of unethical trading activity, criticism related to content moderation, ia warning issued against Pump.Fun by the UK financial regulator—could threaten to dampen sluggish growth.
The lawsuit is based on the idea that memecoins should in some circumstances be classified as securities, a special type of investment instrument. The lawsuit alleges that Pump.Fun allegedly violated securities laws by failing to register its token sale with the Securities and Exchange Commission (SEC), the relevant US financial regulator, and withholding disclosures required of regulated entities to investors.