Solana-based meme coin creation platform Pump.fun has been hit with a proposed class-action lawsuit accusing it of violating U.S. securities laws.

The suit, filed on January 30, alleges that every token created through Pump.fun constitutes an unregistered security, from which the platform has profited nearly $500 million in fees.

Alleged Securities Violations and Investor Losses

The lead plaintiff, Diego Aguilar, claims to have suffered financial losses trading three specific Pump.fun-created meme coins, FWOG, FRED, and GRIFFAIN.

According to the filing, these tokens were aggressively marketed using meme culture and promises of exponential returns, enticing investors but ultimately leading to significant financial losses. FWOG, for instance, was promoted as having reached a $500 million market cap before its value dropped.

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

Although the platform does not directly create the tokens in question, the complaint argues that it facilitates and organizes their launch through automated tools, allowing users to create and sell digital assets within minutes. This, according to the suit, makes the company a “joint issuer” of all tokens launched on it.

The case names U.K.-registered Baton Corporation, the alleged operator of Pump.fun, and three of its co-founders—Alon Cohen, Dylan Kerler, and Noah Tweedale—as defendants. The plaintiffs are seeking legal relief in the form of rescinding all token purchases, monetary damages for affected investors, and coverage of litigation costs.

Criticism and Controversy

This is not the first time the platform has faced legal action. Just two weeks earlier, on January 16, Burwick Law filed a separate class-action suit on behalf of investor Kendall Carnahan.

That case also accused Baton Corporation and its executives of selling unregistered securities. Specifically, it targeted the PNUT token, a Solana-based meme coin inspired by Peanut the Squirrel that allegedly reached a market cap of $1 billion.

The firm’s founder, Max Burwick, has been vocal in his criticism of such sites. On January 15, he publicly condemned them as “the ultimate evolution of multi-level marketing scams, preying on human desperation and the digital attention economy.”

A day later, Burwick Law formally announced its legal campaign against the company, alleging that investors had fallen victim to meme coin rug pulls and misleading promises.

Pump.fun also faced controversy following its November 2024 introduction of a livestream function to enhance user engagement. Some users quickly abused the feature to broadcast explicit and disturbing content. Following public backlash, the company was forced to shut down the livestream, leading to a marked drop in revenue.