Pump.fun is one of the biggest crypto projects in history. It faces a lawsuit as a result of alleged securities laws violations.
In the suit, the defendants specifically claim that the sale and distribution of the meme coin Peanut the Squirrel was illegal. Although the plaintiff only claims that they lost $231, the suit is brought on behalf a larger group.
The lawsuit, filed on Thursday at the Southern District of New York in New York City, claims Pump.fun offered and sold an unregistered securities as a result of strict liability or negligence. Although it does not allege that Pump.fun’s founders committed any fraud, or acted in an intentional or reckless manner, the lawsuit still seeks their accountability.
This filing requests a jury trial in New York.
“Our complaint alleges that Pump.fun markets itself as promoting financial freedom and censorship-resistance,” Burwick Law posted the complaint on X. “While in practice, it has displayed racist, antisemitic, torture, and sexual content on its homepage and exploited the hopes of everyday people—including minors—to collect hundreds of millions of dollars in fees.”
The lawsuit names as defendants UK company Baton Corporation Ltd. which is said to do business as Pump.fun. It also includes its founders Alon Kohen, Dylan Kerler and Noah Bernhard Huge Tweedale, better known as Sapijiju.
Kendall Carnahan is the only plaintiff named. They're being represented by attorneys from Wolf Popper LLP and Burwick Law—the firm that also recently filed a claim against creators of the Hawk Tuah token. Plaintiff claims however that the claim could still be valid. “hundreds or thousands” The suit was filed in behalf of Pump.fun customers who have also been affected by PNUT.
“This is typical in securities class actions, where a representative plaintiff brings claims on behalf of a larger group affected by the same alleged unlawful practices,” Carlo D'Angelo, a crypto criminal defense lawyer, told Decrypt. If the suit is successful, it will seek far more than Carnahan’s losses.
Carnahan says that he purchased PNUT in three separate transactions on the 4th of November. One day later, the entire amount was sold for a mere $231. PNUT then soared over 4,134% within nine days and reached a market cap of $2.4 Billion.
Cohen or Tweedale have not yet responded. DecryptRequest for comments from.
What is the difference between developers and founders?
Users can launch a new token by filling out a few boxes, and optionally purchasing tokens. The Pump.fun standardized contract is used to create a token. According to the lawsuit, the platform, its founders and not token developers or deployers are responsible.
“Token developers on Pump.Fun function merely as participants within Pump.Fun’s rigid framework rather than independent issuers,” “The lawsuit” said. “Pump.Fun maintained centralized control over the token marketing, exchange listings, and market activities,” It is stated that the file will be filed later.
With this simplified token creation process, more than 6 million tokens have been created using the platform in its year lifespan—accounting for up to 71% of new tokens launched on Solana each month. As a result, Pump.fun has made over $420 million in revenue—collected through fees charged per transaction.
According to the lawsuit, once a token has achieved a certain level of success it is deemed that they have a right to sue. “certain level of success” The platform will begin to promote specific tokens. PNUT, for example, was an excellent example. Then, Decrypt There are only two tweets that contain the words “Peanut” You can also find out more about “PNUT”—one of which was congratulating it on hitting a $1 billion market cap.
The lawsuit also claims Pump.fun’s design encourages violence. “child abuse, potentially underage pornography, antisemitism,” More people are trying to pump the value of tokens through provocative stunts. It is illustrated best by the Pump.fun app developer, who tried to boost his TruthOrDare DARE token’s value through a controversial stunt. Mikol, the developer, was rushed immediately to hospital, suffering third-degree burns on his entire body.
The lawsuit’s exhibit B details 12 tokens from Pump.fun that have racist, violent, or harmful characteristics. Pump.fun is accused of promoting tokens that use hate speech, violence and exploitation in order to boost trading volume.
What are crypto degens doing in response to this? What can you do? Invest these tokens.
A woman wearing underwear is tied to a seat in one of the tokens. According to the creator, the token will perform sexual act once it reaches $100,000. The announcement came during a trend of livestreaming that was characterized by multiple, controversial broadcasts going viral.
The lawsuit claims, despite the fact that this is quite shocking, that the website fails to provide basic investor protections in such a situation. Namely, there is no age verification on the site with numerous tokens on the site that are not suitable for underage audiences—although there is a not safe for work tag. There is also no know-your-customer, anti-money-laundering, or risk disclosures on the site.
It’s not the first time Pump.fun finds itself at the center of a controversy.
It was estimated that in May, a disgruntled former employee who was unhappy with the management of the company drained an amount worth $2 million. Jarett DUNN, the former employee, faces charges for abuse of position, and transferring criminal property in Wood Green Crown Court.
After the livestreaming controversy, the UK’s Financial Conduct Authority sent a warning to the platform. Pump.fun then blocked users in the UK.
Stacy Elliott edited this article.
