A cryptocurrency 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, which separately handle class-action lawsuits filed last December by investors against the meme coin launched by internet celebrity Haliey Welch, better known as Hawk Tuah Girl, which The coin plummeted in value shortly after trading began. (Welch is not named as a defendant in the lawsuit.)

Max Burwick, founding partner at Burwick Law, said: “These ‘Emperor’s New Clothes’ cryptocurrency schemes cannot continue to masquerade as legitimate finance and leave vulnerable people in trouble.”

Pump.Fun was a hit when it launched in January 2024, offering people a way to instantly issue for free memecoin, a highly volatile cryptocurrency that often has no intrinsic use other than speculation. A new lawsuit filed Thursday in the Southern District of New York alleges that Pump.Fun operated as an unregistered issuer and seller of securities. The complaint alleges that the platform downplayed the possibility of losing money on memecoin transactions in its marketing communications, putting investors at higher financial risk.

Additionally, the lawsuit alleges that these memecoin platforms, such as Pump.Fun, are designed in a way to incentivize pump-and-dump activity. The complaint states: “Early investors or insiders artificially inflated the price of tokens through coordinated purchases and promotions, and then sold their token holdings at the highest prices, causing the value of the tokens to plummet and causing huge consequences for later investors. loss."

The complaint points to the launch of a specific Pump.Fun memecoin (PNUT), which referenced a celebrity squirrel who was euthanized in New York last year to support 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, dismissed the idea that the platform would benefit from the losses of ordinary investors. point of view. “The idea with Pump was to build something that puts everyone on the same playing field,” Tweeddale said. "I want to stress that we don't want people to lose money on our platform. It doesn't do us any good anyway."

Over 6 million unique meme coins have been launched through Pump.Fun, with the most successful ones worth hundreds of millions of dollars. Market data shows that the memecoin market is currently worth more than $100 billion.

According to third-party reports, Pump.Fun generated more than $350 million in revenue during its first 12 months of operation, including a 1% transaction cut. The platform expects revenue to exceed $1 billion by 2025.

However, lawsuits filed by cryptocurrency investors - following reports of unethical trading activity, criticism of content moderation and a warning against Pump.Fun from the UK's financial regulator - could curb its runaway growth.

The lawsuit centers on the idea that memecoins should in certain circumstances be classified as securities, a specific type of investment vehicle. The complaint alleges that Pump.Fun failed to register the token sale with the relevant U.S. financial regulator, the Securities and Exchange Commission (SEC), allegedly violating securities laws and refusing investors to make disclosures required by regulated entities.