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

Memecoin platform Pump.fun is once again in legal scoop as a proposed class action lawsuit accuses it of violating U.S. securities laws. The lawsuit claims that all tokens are created on Pump. fun’s platform qualifies as securities, and the company has raked in nearly $500 million in fees by enabling users to launch memecoins. Filed in the Southern District of New York, the case brings up the ongoing debate of when a token is considered a security.

Legal Battle Heats Up

The lead plaintiff, Diego Aguilar, alleges he suffered financial losses trading Pump. fun-created tokens FWOG, FRED, and GRIFFAIN. Although Pump.fun doesn’t directly create tokens, the lawsuit argues that by providing an automated launchpad for memecoins, the company acts as a “joint issuer.” The suit targets the U.K.-registered Baton Corporation, believed to operate Pump.fun, along with its co-founders.

Protecting the investor interest, Burwick Law and Wolf Pepper LLP jointly filed a lawsuit against the platform for harming investors with memecoin scams and broken promises. The firm says it has been working with people who lost money due to rug pulls and fraud. It also criticized Pump.fun for making hundreds of millions in fees while allowing harmful and offensive content on its platform.

However, an X user in his post shared his thoughts on the securities controversy, known as Apate pointing out that memecoins were explicitly excluded from being classified as securities under the 1987 Securities Exchange Act amendment. He also highlights that the SEC lost a similar case in 2019 involving Dogecoin derivatives, suggesting a tough legal road ahead for regulators trying to label memecoins as securities.

Not Their First Lawsuit

This isn’t the first legal battle for Pump.fun. The same law firm, Wolf Popper LLP, previously sued the company over the PNUT token, which once hit a $1 billion market cap but has since plummeted by 89%. Another suit targeted the HAWK token, associated with 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.

Regulatory Challenges Loom

Pump.fun has faced scrutiny since its launch, including a warning from the U.K. financial regulator and criticism for its now-disabled livestream feature, which some users misused. Meanwhile, the SEC under the Trump administration is shifting its approach to crypto regulation, which might change the crypto game for violators.