Pump.fun Faces $500M Lawsuit: Are All Memecoins Securities?

Memecoin platform Pump.fun is once again in legal trouble, as a class action lawsuit accuses it of breaking U.S. securities laws. The lawsuit argues that all tokens created on Pump.fun’s platform qualify as securities, with the company reportedly making nearly $500 million in fees by allowing users to launch memecoins.

The case, filed in the Southern District of New York, adds fuel to the ongoing debate about when a token should be considered a security.

Understanding the Allegations

The lead plaintiff, Diego Aguilar, claims to have lost money trading memecoins like FWOG, FRED, and GRIFFAIN, which were created on Pump.fun. While the platform doesn’t directly make tokens, the lawsuit suggests that by offering an automated launchpad for memecoins, the company acts as a “joint issuer.” The suit targets Baton Corporation, a U.K.-registered company believed to run Pump.fun, along with its co-founders.

Burwick Law and Wolf Pepper LLP are leading the charge in protecting investors, filing the lawsuit against Pump.fun for harming users with memecoin scams and unmet promises. The law firm says it represents people who lost money due to fraudulent “rug pulls.”

They also criticize Pump.fun for making millions in fees while letting harmful and offensive content circulate on its platform.

Securities Debate: Crypto vs SEC Again?

A user on X, known as Apate, shared his opinion on the securities controversy, pointing out that the 1987 Securities Exchange Act amendment specifically excludes memecoins from being classified as securities. He also referenced a 2019 case where the SEC lost a case involving Dogecoin derivatives, suggesting that it may be difficult for regulators to label memecoins as securities.

This isn’t the first time Pump.fun has faced legal issues. Wolf Popper LLP had previously sued the platform over the PNUT token, which briefly reached a $1 billion market cap before dropping by 89%. Another lawsuit targeted the HAWK token, connected to influencer Hailey Welch.

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Market sentiment

Despite the controversy and lawsuits, memecoins have seen massive growth in early 2025. A clear sign of this is Pump.fun’s record transaction volume, surpassing even major networks like Solana and Ethereum. In the past month, Pump.fun made $116.72 million in revenue, beating Solana’s $116.46 million and Ethereum’s $107.64 million. In just 24 hours, trading volume hit $295.53 million, with fees soaring to $1.45 billion.

Challenges and Changes Ahead

Since its launch, Pump.fun has faced scrutiny, including a warning from the U.K. financial regulator and criticism for its now-disabled livestream feature, which was misused by some users. Meanwhile, the SEC, under the Trump administration, is shifting its approach to cryptocurrency regulation, which could change the game for companies that break the rules.