The memecoin platform that made fortunes and destroyed lives is now fighting for survival. Pump.fun, the Solana-based token factory that generated over $722 million in fees while allowing users to launch 50,000+ memecoins in minutes, faces a dramatically expanded class action lawsuit that now names Solana Foundation, Solana Labs, Jito Labs, and several top executives including Solana co-founders Anatoly Yakovenko and Raj Gokal as co-defendants in a RICO (Racketeer Influenced and Corrupt Organizations) complaint.
Originally filed January 30, 2025 against Pump.fun’s parent company Baton Corporation and its three co-founders, the lawsuit was amended July 22 to allege that the entire Solana ecosystem operated as a “coordinated racketeering enterprise designed to simulate the functions of a digital casino operated illegally under the guise of meme coin creation and trading.” The expansion transforms what began as straightforward securities fraud allegations into a sprawling conspiracy case targeting the infrastructure that enabled Pump.fun’s operations.
For Pump.fun, the stakes couldn’t be higher. The platform’s daily revenue has crashed from $15+ million at peak to approximately $4 million as legal pressure mounts. Meanwhile, the lawsuit’s novel legal theory, that automated token creation tools inherently produce unregistered securities, could set precedent affecting the entire $50 billion memecoin market. If plaintiffs prevail, every token launch platform from Solana to Ethereum could face similar litigation, fundamentally restructuring how crypto projects distribute tokens.
The Core Allegations: $722M “Illegal Gambling Enterprise”
The Original Complaint (January 30, 2025):
Lead plaintiff Diego Aguilar filed the initial lawsuit in U.S. District Court for the Southern District of New York, claiming he lost money trading three Pump.fun-created memecoins: FWOG, FRED, and GRIFFAIN. His complaint alleged that Pump.fun’s standardized token creation process made every token launched on the platform an unregistered security under the Securities Act of 1933.
The Legal Theory:
The lawsuit applies the Howey Test, the Supreme Court standard for determining whether something constitutes a security. To qualify, an asset must involve:
1. Investment of money
2. In a common enterprise
3. With expectation of profits
4. Derived from efforts of others
Aguilar’s attorneys argue Pump.fun meets all four criteria because:
– Investment: Users buy tokens with expectation of price appreciation
– Common Enterprise: All tokens use identical bonding curve pricing mechanisms
– Profit Expectation: Marketing emphasizes speculative gains, not utility
– Others’ Efforts: Pump.fun controls infrastructure, liquidity, exchange listings, and promotion
The Expanded RICO Claims (July 22, 2025):
The amended complaint escalates beyond securities violations to racketeering allegations under the Racketeer Influenced and Corrupt Organizations Act. Wolf Popper LLP and Burwick Law added Solana Foundation, Solana Labs, Jito Labs, and numerous executives as defendants, arguing the entire ecosystem facilitated “novel evolution in Ponzi and pump-and-dump schemes.”
New defendants include:
– Solana Foundation: Anatoly Yakovenko, Raj Gokal, Dan Albert, Lily Liu, Austin Federa
– Jito Labs: Developers of transaction execution infrastructure used by Pump.fun
The RICO framing accuses defendants of operating an organized criminal enterprise where Pump.fun functioned as front-end casino, Solana provided infrastructure, and Jito Labs optimized transaction ordering to maximize extractable value from retail traders.
How Pump.fun Made (and Lost) $722 Million
Revenue Generation:
Pump.fun charges a mandatory 1% fee on all transactions, plus creator fees when tokens “graduate” to decentralized exchanges after reaching $100,000 market cap. The lawsuit alleges this fee structure generated $722.85 million between launch (early 2024) and January 2025.
Breaking this down:
– Peak Monthly Revenue: $200+ million (estimated, pre-lawsuit)
– Daily Revenue Peak: $15+ million
– Current Daily Revenue: ~$4 million (post-lawsuit crash)
– Transaction Volume: Billions in cumulative trading volume across 50,000+ launched tokens
Token Creation Metrics:
– Total Tokens Launched: 50,000+ memecoins
– Average Lifespan: Days to weeks (most fail quickly)
– Successful “Graduations“: ~1-2% reach $100K market cap and migrate to Raydium
– Profitable Wallets: Only 0.4% of platform users realized profits exceeding $10,000
The 0.4% profitability rate is particularly damning. It suggests Pump.fun operates as a sophisticated wealth extraction mechanism where a tiny fraction of sophisticated traders (likely insiders and MEV bots) capture 99.6% of profits while retail users absorb losses.
Comparison to Gambling:
The lawsuit explicitly frames Pump.fun as illegal gambling. In Nevada casinos, house edge on games ranges from 0.5% (blackjack) to 5% (roulette). Pump.fun’s economics are far worse for users—with 99.6% losing money, the effective “house edge” is 99.6%, making it more extractive than any legal gambling operation.
The Consolidated Case: Two Lawsuits Become One
The PNUT Lawsuit (January 16, 2025):
Before Aguilar filed, investor Kendall Carnahan sued Pump.fun over the PNUT memecoin, which launched October 31, 2024 and briefly rallied before collapsing. Carnahan’s complaint alleged PNUT constituted an unregistered security and that Pump.fun acted as unlicensed broker-dealer.
Consolidation Order:
On July 22, Judge Colleen McMahon ordered both cases consolidated, reasoning “both lawsuits are seeking the same relief for the same alleged violation.” McMahon appointed lead plaintiffs and consolidated the complaints into single amended RICO case.
Current Status:
– Case: Aguilar v. Baton Corporation Ltd. et al., No. 1:25-cv-00880
– Court: U.S. District Court, Southern District of New York
– Judge: Colleen McMahon
– Lead Counsel:Wolf Popper LLP and Burwick Law
– Defendants’ Response Deadline: Extended multiple times; Baton Corporation filed appearance June 12, 2025
The SEC’s Surprise Position: Memecoins Aren’t Securities
In a development that could undermine the plaintiffs’ entire case, the SEC clarified its position in February 2025 that “memecoins do not involve the offer and sale of securities under the federal securities laws.”
Why This Matters:
The SEC’s statement directly contradicts the lawsuit’s central premise. If the federal regulator responsible for enforcing securities laws declares memecoins aren’t securities, how can private plaintiffs sue for securities fraud?
The Timing:
The SEC’s clarification came under the current administration’s pro-crypto approach. SEC Commissioner Hester Peirce and newly appointed leadership established a crypto task force charged with creating clear regulatory frameworks. The memecoin statement represents part of this broader effort to define what is and isn’t subject to securities regulation.
Legal Analysis:
While the SEC’s position carries significant weight, it doesn’t automatically dismiss private lawsuits. Courts can determine assets are securities even if regulators say otherwise. However, defendants will cite the SEC statement as authoritative guidance that should inform judicial interpretation of securities laws.
Plaintiff’s Counterargument:
Wolf Popper and Burwick Law will argue the SEC’s blanket statement doesn’t apply to Pump.fun’s specific fact pattern. They’ll emphasize that Pump.fun’s centralized control, mandatory fee structure, and promotional activities distinguish its tokens from typical organic memecoins that emerge without coordinated promotion.
The “Joint Issuer” Theory: Can Platforms Be Liable?
The lawsuit’s most novel and controversial claim is that Pump.fun qualifies as “joint issuer” of every token launched on its platform.
Traditional Understanding:
Normally, token issuers are individuals or teams who create and promote specific cryptocurrencies. Platforms providing infrastructure (like Ethereum or Binance Smart Chain) aren’t considered issuers of tokens built atop them.
Pump.fun’s Alleged Difference:
The complaint argues Pump.fun’s level of control exceeds typical infrastructure providers:
Standardized Templates:
Every token uses identical smart contract templates, bonding curves, and liquidity mechanisms. Users can’t customize fundamental economics, they simply choose names, logos, and descriptions.
Pricing Control:
The bonding curve algorithm determines all token prices. Users can’t set prices or adjust curves. This centralized pricing mechanism, plaintiffs argue, makes Pump.fun the de facto controller of each token’s economics.
Liquidity Management:
Pump.fun manages when and how tokens “graduate” to decentralized exchanges. This exit mechanism is standardized across all tokens, creating common enterprise structure that satisfies Howey Test requirements.
Promotional Infrastructure:
The platform previously offered livestreaming features where creators promoted tokens directly through Pump.fun interfaces. Though disabled after controversy, this demonstrated Pump.fun’s role in marketing rather than merely hosting.
Why This Theory Is Dangerous:
If courts accept the “joint issuer” doctrine, it would revolutionize platform liability across crypto. Uniswap, which provides liquidity pool infrastructure, could be deemed joint issuer of every token listed. Ethereum itself could face claims as joint issuer of all ERC-20 tokens. The precedent would be catastrophic for permissionless blockchain development.
The Solana and Jito Expansion: Infrastructure as Crime
The July 22 amended complaint’s most audacious move was adding Solana Foundation, Solana Labs, and Jito Labs as defendants.
Solana’s Alleged Role:
Plaintiffs claim Solana provided the blockchain infrastructure that enabled Pump.fun’s operations while benefiting from increased network activity and transaction fees. By allowing Pump.fun to operate and by promoting Solana’s utility for “fast, cheap” token launches, the Foundation allegedly facilitated the racketeering enterprise.
Named Solana defendants include:
– Anatoly Yakovenko (Co-founder, key architect)
– Raj Gokal (Co-founder, CEO)
– Dan Albert (Executive Director, Solana Foundation)
– Lily Liu (President, Solana Foundation)
– Austin Federa (Former communications lead)
Jito Labs’ Alleged Role:
Jito Labs develops transaction execution infrastructure that optimizes MEV (maximal extractable value) on Solana. The lawsuit alleges Jito’s technology enabled sophisticated traders to front-run retail orders on Pump.fun, extracting value from unsophisticated users.
By providing infrastructure that specifically benefits professional traders over retail participants, Jito Labs allegedly participated in the racketeering scheme that extracted $722 million while leaving 99.6% of users with losses.
The Legal Stretch:
Holding infrastructure providers liable for how their technology is used represents massive legal overreach. Under this logic:
– AWS could be liable for hosting illegal gambling sites
– Visa could be liable for processing payments to sanctioned entities
– Internet service providers could be liable for criminal activity using their networks
Solana and Jito will argue they provide neutral infrastructure with countless legitimate uses. Pump.fun’s alleged misconduct doesn’t make infrastructure providers co-conspirators any more than telephone companies are liable when criminals use phones.
The Controversial Content: Violence, Self-Harm, and Exploitation
Beyond securities allegations, the lawsuit highlights disturbing content promoted through Pump.fun’s now-disabled livestream feature.
The Allegations:
Burwick Law’s announcement of the lawsuit stated: “In the past few months, Pump.fun has collected hundreds of millions of dollars in fees while illicit drug use, self-harm, racism, antisemitism, lewd acts, bestiality, violent and other antisocial acts were displayed on the platform.”
Documented Incidents:
Decrypt and other crypto media documented:
– Creators performing self-harm on livestreams to promote tokens
– Animal cruelty recorded live while pushing memecoin launches
– Threats of violence and explicit sexual content used as marketing
– Racist, antisemitic, and hateful imagery in token names and descriptions
Pump.fun’s Response:
Following November 2024 media coverage, Pump.fun disabled its livestream features entirely. Co-founder Alon Cohen defended the platform, noting that trading data showing only 0.4% profitability is “skewed” because many traders realize gains after tokens graduate to external exchanges like Raydium.
Content Moderation Failure:
The lawsuit alleges Pump.fun “minimized or omitted crucial investor protections” including:
– No Know Your Customer (KYC) verification
– No Anti-Money Laundering (AML) compliance
– No age verification (allowing minors to speculate)
– No risk disclosures or trading limits
– No content moderation for hateful or violent material
For context, even unregulated offshore crypto casinos typically implement age verification and AML checks. Pump.fun’s complete absence of these protections, combined with allowing minors to access what the lawsuit characterizes as gambling, strengthens RICO claims.
What Happens Next: Trial Timeline and Potential Outcomes
Current Procedural Status:
– Defendants filed appearance June 12, 2025
– Multiple deadline extensions granted for response to consolidated complaint
– Discovery phase likely extends through mid-2026
– Trial unlikely before 2027 given complexity
Possible Resolutions:
1. Settlement (Most Likely):
Given the expanded defendant list and RICO’s treble damages provisions (3x actual damages), settlement pressure is enormous. A $100-200 million settlement split among defendants could resolve the case without establishing precedent.
Pump.fun’s daily revenue decline from $15M to $4M suggests the platform is already mortally wounded. Settlement might be cheaper than years of litigation plus reputation destruction.
2. Dismissal on SEC Guidance:
Defendants will move to dismiss based on the SEC’s February statement that memecoins aren’t securities. If Judge McMahon accepts this argument, the securities fraud claims collapse, leaving only RICO allegations that would be harder to prove without securities violations as predicate acts.
3. Partial Summary Judgment:
Courts could dismiss claims against Solana and Jito while allowing claims against Pump.fun to proceed. This would limit precedential impact while still holding the platform accountable.
4. Trial and Verdict:
If the case reaches trial, it would create binding precedent on automated token launchers’ liability. A plaintiff victory would devastate the token launch industry; defendant victory would provide safe harbor for similar platforms.
Conclusion: The $50 Billion Question
Pump.fun’s lawsuit represents more than one platform’s legal troubles—it’s a referendum on whether automated token generation tools can exist in their current form.
The expanded RICO allegations naming Solana and Jito demonstrate how aggressive plaintiffs’ attorneys can be when chasing $722 million in fees. While the infrastructure liability claims will likely fail (holding blockchain developers responsible for user behavior sets impossible precedent), Pump.fun itself faces genuine existential risk.
The SEC’s position that memecoins aren’t securities provides some defense, but doesn’t address the RICO, fraud, and negligence claims. And even if Pump.fun wins legally, it may have already lost practically—daily revenue has collapsed 73%, reputation is destroyed, and users have migrated to competitors.
For the $50 billion memecoin market, the lesson is clear: platforms must implement basic protections (KYC, age verification, content moderation) or face litigation that could prove terminal. The Wild West era of “launch anything, moderate nothing” is ending, either through self-regulation or court orders.
Whether Pump.fun survives to see trial remains uncertain. What’s certain is that the platform that epitomized crypto speculation’s excesses now serves as cautionary tale about the legal risks of enabling speculation without safeguards.
Disclaimer: This content is for educational and reference purposes only and does not constitute any investment advice. Digital asset investments carry high risk. Please evaluate carefully and assume full responsibility for your own decisions.
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