In a startling turn of events, the Solana-based memecoin platform Pump.fun is at the center of a sizable class action lawsuit, with allegations that it runs an unlicensed “Meme Coin Casino.” This legal battle posits that the platform has potentially caused staggering losses between $4 billion and $5.5 billion for retail traders while raking in over $722 million in revenue. The lawsuit, lodged in the United States District Court for the Southern District of New York, targets not just Pump.fun and its parent firm, Baton Corporation, but also its founders—Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale—alongside executives from Solana Labs, the Solana Foundation, and Jito Labs, creating an extensive web of accountability that’s hard to ignore.
Source: Court Document
The lawsuit paints a grim picture, depicting Pump.fun as a “Pump Enterprise,” which functions as a cohesive racketeering organization—a claim backed by the Racketeer Influenced and Corrupt Organizations (RICO) Act. Plaintiffs Diego Aguilar, Kendall Carnahan, and Michael Okafor assert that Pump.fun operates like a slot machine cabinet—users deposit their SOL currency, only to receive unpredictable outcomes in the form of tokens.
One particularly alarming aspect of the platform is its alleged facilitation of speculative trading, supposedly allowing minors to participate without age verification or the necessary Know Your Customer (KYC) checks. Moreover, Jito Labs finds itself in hot water, as accusations include “rigging the games” by directing profitable transactions to the highest bidders through what’s called Maximal Extractable Value (MEV) bundling. This raises serious questions about the integrity of the platform and the protections in place for its users.
The depth of the allegations doesn’t stop there. The lawsuit also asserts that Pump.fun might be engaging in intellectual property theft, utilizing tokens that impersonate well-known companies like Apple, Tesla, and Meta, as well as the names of various celebrities, all without appropriate authorization. Adding to the gravity of the situation, there’s mention of the Lazarus Group, a notorious cybercrime syndicate, reportedly using Pump.fun to launder a staggering $1.08 million in cryptocurrency.
It’s clear that Pump.fun’s financial success may be built on the backs of traders facing heavy losses coupled with potential regulatory violations. Previous reports highlight that since May 2024, the platform has extracted approximately $741 million in fees from its users, having sold an impressive 4.1 million SOL tokens through platforms like Kraken. To put this in perspective, an astonishing 99.6% of its 13.55 million trader addresses have failed to realize profits exceeding $10,000.
Pumpfun(@pumpdotfun), recently suspended by X, has sold a total of ~4.1M $SOL($741M) at an average price of ~$180 since May 19, 2024.264,373 $SOL was sold for 41.64M $USDC at $158.3.84M $SOL($699M) was deposited to #Kraken at $182.
— Lookonchain (@lookonchain) June 17, 2025
On top of that, the platform takes a 1% transaction rake on every trade, and it has recently introduced a 0.05% revenue-sharing model for token creators. Recent disclosures from court documents reveal that Pump.fun generated over $400 million in fee revenue throughout 2024 alone from this controversial operation. Meanwhile, Jito Labs enjoyed windfall earnings of over $633 million in user tips, solidifying its status as a heavyweight in the Solana ecosystem with its “Jito-Solana Block Engine” that sells preferential block-inclusion rights and captures MEV on behalf of Solana stakers.
The partnership between Pump.fun, Solana Labs, and the Solana Foundation has not gone unnoticed; as SOL’s price skyrocketed over 1,000% since its 2022 lows, both Solana entities found themselves in a significant financial upswing, controlling substantial SOL reserves and operating validators, thus reaping handsome rewards from the heightened blockchain activity.
In a twist that captures the ever-evolving nature of this scenario, the lawsuit identifies a total of 20 specific “Pump Tokens” as unregistered securities. These tokens, which include names like StakeCoin, QuStream, DeepCore AI, and Apex AI, are alleged to have misled investors by promising “real-world utility and value tied to future project success,” all while bypassing SEC registration and necessary risk disclosures. Lead plaintiff Michael Okafor’s own tale of woe includes a staggering loss of approximately $242,076 when the value of his acquired tokens plummeted.
⚖️ https://t.co/BB5leCKHRh allegedly sold unregistered securities disguised as meme tokens.#Pump.fun #memecoins #UnregisteredSecurities
— Cryptonews.com (@cryptonews) January 31, 2025
The seismic impact of these legal challenges becomes even clearer when we look at recent developments surrounding Pump.fun’s native PUMP token. Launched in July 2025, it experienced a rapid decline, losing 30% of its value within just 24 hours, shortly after peaking at pre-market highs of $0.0072. Since then, the token has plummeted nearly 50%, disappointing multiple stakeholders who had hoped for substantial returns.
Founder Alon Cohen revealed during a livestream that no immediate airdrop of tokens is in the pipeline, a disclosure that led to a significant 14% drop in PUMP’s price just 24 hours later. The token, now trading at $0.0031, has seen a wave of early investors dumping their positions, with collective losses exceeding $1 million.
📈 https://t.co/45JfH1EnrU’s native PUMP token declined 14% in the last 24 hours and plummeted more than 40% in the last 7 days.#Pump.Fun #PUMPtoken #AlonCohen
— Cryptonews.com (@cryptonews) July 24, 2025
This unfolding saga has caused X platform to suspend Pump.fun’s official account and Cohen’s personal account, raising eyebrows about possible investigations by the SEC and Securities law violations. Other companies in the sector are taking note; competitor LetsBonk has swiftly stepped in, capturing a significant market share with a daily trading share of 44.87%, edging out Pump.fun’s near 43.73%.
The plaintiffs in the lawsuit are pursuing class certification and seeking compensatory damages, alongside treble damages under RICO violations. They’re calling for the appointment of a federal equity receiver and permanent injunctions to prevent the defendants from continuing operations on similar platforms without the necessary licenses and compliance frameworks in place.
This case exemplifies the ongoing challenges and malpractices in the burgeoning space of cryptocurrency, particularly around meme tokens and unregulated platforms. As the legal action unfolds, it serves as a stark reminder of the potential risks for investors in this volatile sector. Stay informed as this story develops, and consider your own investments wisely in the ever-changing world of crypto.
For additional insights into cryptocurrency regulations and ongoing legal matters, you can refer to reputable sources like the SEC or CoinDesk.