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Is the Memecoin platform Pump.fun a Ponzi scam?

Solana ecosystem-based memecoin platform Pump.fun is once again facing legal action in the US.

By Mike Hesp
• 2 min read
Is the Memecoin platform Pump.fun a Ponzi scam?

Solana ecosystem-based memecoin platform Pump.fun is once again facing legal action in the US. A new complaint filed on January 30 accuses the company of selling "highly volatile" unregistered securities to investors in violation of U.S. securities laws.

According to the complaint, Pump.fun's core business is "issuing and marketing unregistered securities in collaboration with influencers." “The business model represents a new evolution of Ponzi schemes and pump-and-dump schemes,” it said. The lawsuit is against Baton Corporation, the owner and operator of Pump.fun, as well as the three founders.

Plaintiffs named in the documents claim to have suffered losses by investing in three memecoins created through Pump.fun—FRED, FWOG, and GRIFFAIN—that were allegedly promoted as investments with “exponential” return potential. These complaints follow previous allegations by the same plaintiffs several weeks ago. Pump.fun would tolerate violence, racism and abuse on its platform. Legal experts had already warned in November of possible criminal prosecution and civil lawsuits due to disturbing livestreams.

The British financial regulator has already issued a warning against the platform. Shortly afterwards, Pump.fun blocked access for users from the United Kingdom. Despite, or perhaps because of, the platform's controversial features, it remains one of the most popular applications on the Solana blockchain. According to data from DeFi-Llama, Pump.fun earned around $440 million last year, putting it ahead of established DeFi protocols like Aave.

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