Online entertainment platform Pump.fun under scrutiny due to accusations of billions in fees and fraudulent practices
In a recent turn of events, Pump.fun, a popular decentralized meme coin launchpad on the Solana blockchain, is currently embroiled in a $5.5 billion class-action lawsuit. The lawsuit alleges that Pump.fun operates as an unlicensed "Meme Coin Casino," enabling high-risk speculative coins and defrauding users [1][2][3].
The lawsuit accuses Pump.fun’s operators and founders of running a racketeering scheme under the RICO Act, exploiting Solana’s blockchain to launch rapid-fire speculative tokens often described as unregistered securities. Plaintiffs highlight severe financial losses among users and liken the platform’s model to gambling with opaque fees and misleading promises of utility from tokens [1][2][3].
The legal action has expanded to implicate Solana Labs, Solana Foundation, and Jito Labs, along with their executives. Accusations include knowingly facilitating Pump.fun’s operations, providing infrastructure and validator services that supported the platform’s speculative and allegedly fraudulent activities. The claims also incorporate accusations of wire fraud, illegal gambling, intellectual property theft, unlicensed money transmission, and deceptive marketing practices [2][3].
Recently, numerous crypto-related profiles, including Pump.fun co-founder Alon Cohen and Shaw Walters from Eliza Labs, have had their accounts suspended [1]. The suspension of accounts occurs ahead of Pump.fun's anticipated $1 billion token sale [1]. Speculation suggests the account suspensions may be linked to possible breaches involving unauthorized use of API access.
The removal of the platform’s official X account, which had over 457,000 followers, risks undermining the launch by severing a key communication avenue.
Pump.fun has generated roughly $741 million in fees by selling about 4.1 million SOL tokens [1]. Of the fees generated, 3.84 million SOL was transferred directly to the Kraken exchange, and an additional 264,373 SOL was converted into $41.64 million in USDC [1].
The crypto community has shown a mixed response to the allegations. While some users echoed Crypto Bitlord’s concerns and called to "cancel Pump.fun," others have questioned the validity of the accusations [1]. Crypto influencer Crypto Bitlord publicly criticized Pump.fun, accusing the platform of collecting millions of dollars in fees [1].
In addition, livestreams on Pump.fun have been exploited for disturbing content. At least 19 accounts have been deactivated on Pump.fun [1].
As the legal proceedings unfold, it remains to be seen how this will impact Pump.fun and the broader Solana ecosystem.
References: [1] Decrypt.co. (2022). Pump.fun under investigation for alleged securities fraud. [online] Available at: https://decrypt.co/87702/pump-fun-under-investigation-for-alleged-securities-fraud
[2] The Block. (2022). Pump.fun faces class action lawsuit over 'Meme Coin Casino' allegations. [online] Available at: https://www.theblockcrypto.com/linked/116385/pumpfun-class-action-lawsuit-meme-coin-casino-allegations
[3] CoinDesk. (2022). Pump.fun faces class-action lawsuit as Solana ecosystem reels from crypto winter. [online] Available at: https://www.coindesk.com/business/2022/10/11/pumpfun-faces-class-action-lawsuit-as-solana-ecosystem-reels-from-crypto-winter/
- The class-action lawsuit against Pump.fun alleges that the operators and founders of the platform are running a racketeering scheme under the RICO Act, using Solana's blockchain to launch speculative tokens, some of which are described as unregistered securities.
- The lawsuit also implicates Solana Labs, Solana Foundation, and Jito Labs, along with their executives, for knowingly facilitating Pump.fun’s operations, providing infrastructure and validator services that supported the platform’s speculative and allegedly fraudulent activities.
- Recent reports suggest that the account suspensions of Pump.fun co-founder Alon Cohen and others may be linked to possible breaches involving unauthorized use of API access, which occurred ahead of Pump.fun's anticipated $1 billion token sale.
- In the general-news section of magazines, finance, and technology publications, discussions about Pump.fun's legal troubles and the wider implications for the Solana ecosystem have stirred debates within the crypto community, with some calling for the cancellation of Pump.fun and others questioning the validity of the accusations against the platform.
