Pump.Fun Slapped With Second Lawsuit Accusing of Violating US Securities Laws

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Sujha Sundararajan

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Sujha Sundararajan

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Sujha has been recognised as 🟣 Women In Crypto 2024 🟣 by BeInCrypto for her leadership in crypto journalism.

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Pump.fun faces second lawsuit

Memecoin generator platform Pump.fun is now facing a second class-action lawsuit, alleging that it violated U.S. securities laws. The plaintiff claimed that Pump.fun sold unregistered securities disguised as meme tokens.

Per the lawsuit filed on Thursday, the platform had attracted nearly $500 million in fees by marketing unregistered highly-volatile memecoins.

“Pump.Fun’s core function is to work alongside influencers to co-issue and market unregistered securities,” it read. “Inherent to its operations are a novel evolution in Ponzi and pump and dump schemes.”

Filed in the U.S. District Court for the Southern District of New York, the lawsuit is the first to bring charges against all memecoins on the Pump.fun platform.

Plaintiff Diego Aguilar has filed charges against UK-registered Baton Corporation, owner of Pump.fun, and the company’s co-founders.

Aguilar claimed that he had purchased several memecoins from Pump.fun and suffered financial losses, particularly FWOG, FRED, and GRIFFAIN tokens.

These tokens allegedly promised of exceptional returns and led to significant losses, despite having reached high valuations.

For instance, Solana-based FWOG token, saw an astounding 1,850% increase in a short period, sparking significant discussion among investors. However, the memecoin is now 51.20% lower than its all-time high, reflecting its high-risk nature. Nevertheless, FWOG’s market cap significantly increased to $90.78M following community intervention.

Although the platform does not directly create memecoins, the lawsuit accused that it “orchestrated this scheme by providing automated tools that allow anyone to create and sell nearly worthless digital Tokens in minutes.”

Additionally, Pump.fun “omits basic investor protections,” including KYC procedures, AML protocols and risk disclosures, the charges read.

Pump.fun Already Faces Lawsuit For Sale of Peanut the Squirrel Token

The law firm which filed the case against Pump.fun has already filed a lawsuit on January 16. Burwick Law on behalf of plaintiff Kendall Carnahan, accused for selling an unregistered security – Peanut the Squirrel (PNUT) token.

PNUT is a memecoin on the Solana blockchain, which according to the case, reached a $1 billion market capitalization.

Further, Max Burwick, the law firm’s founder and partner, slammed platforms like Pump.fun for “exploitation of memecoins.”

He called it “multi-level marketing scams, preying on human desperation and the digital attention economy.”

“Memecoins and platforms like Pump.fun have nothing to do with advancing crypto’s capabilities – they are a perverse distortion of its promise.”

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