Home Money They went after crypto promoters Hawk Tuah. Now they are suing Pump.Fun

They went after crypto promoters Hawk Tuah. Now they are suing Pump.Fun

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They went after crypto promoters Hawk Tuah. Now they are suing Pump.Fun

A crypto investor has filed a class action lawsuit against Pump.Fun, a platform for launching and investing in meme-inspired cryptocurrencies, after suffering trading losses.

Representing the plaintiffs are Wolf Popper and Burwick Law, the two firms that run a separate class action lawsuit presented by investors in December about a memecoin launched by web personality Haliey Welch, better known as the Hawk Tuah girl, who collapsed in value shortly after the negotiation began. (Welch was not named as a defendant in that lawsuit.)

“These ‘emperor’s new clothes’ crypto schemes can no longer masquerade as legitimate finance, leaving the vulnerable in the lurch,” says Max Burwick, founding partner at Burwick Law.

Pump.Fun was a hit when it launched in January 2024, giving people a way to launch memecoins (highly volatile cryptocurrencies that generally have no inherent purpose beyond speculation) instantly and at no cost. The new lawsuit, filed Thursday in the Southern District of New York, alleges that Pump.Fun has operated as an unregistered issuer and seller of securities. By making marketing claims that downplay the likelihood of losing money trading memecoins, the complaint alleges, the platform also puts investors at greater financial risk.

Furthermore, the lawsuit alleges that these memecoin platforms, such as Pump.Fun, are designed in such a way that they incentivize pump and dump activity. “Early investors or insiders artificially inflate token prices through coordinated buying and promotion campaigns, then sell their holdings at peak prices, causing the token’s value to collapse and leaving later investors with substantial losses,” the complaint states.

The complaint points to the circumstances surrounding the launch of a particular Pump.Fun memecoin, PNUT, which references the famous squirrel sacrificed last year in New York, to evidence 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 three Pump.Fun co-founders named in the lawsuit, refuted the idea that the platform would benefit from regular investors losing money. “The idea with Pump was to build something where everyone was on the same playing field,” Tweedale said. “I want to emphasize that we do not want people to lose money on our platform. “It doesn’t benefit us in any way.”

More than 6 million unique memecoins have been released through Pump.Fun, the the most successful of which They are valued at hundreds of millions of dollars. The memecoin market is now worth over $100 billion in total. market data sample.

In its first 12 months of operation, Pump.Fun is reported by third parties having generated more than $350 million in revenue, with a 1 percent reduction in transactions. The platform is on track to generate more than $1 billion in revenue by 2025.

However, the lawsuit filed by the crypto investor, which follows reports of unethical trading activity, criticism related to content moderation, and a warning issued against Pump.Fun by the UK financial regulator—could threaten to curb runaway growth.

The lawsuit is based on the idea that memecoins should, in some circumstances, be classified as securities, a particular type of investment instrument. The complaint claims that by failing to register token sales with the Securities and Exchange Commission (SEC), the relevant US financial regulator, Pump.Fun allegedly violated securities laws and denied investors required disclosures from regulated entities.

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