Class Action Lawsuit Filed Against Pump.fun
A legal firm in the United States has recently filed a class action lawsuit against Pump.fun, as announced on Jan. 17.
Claims of Financial Losses
The lawsuit alleges that investors who traded the PNUT token on the platform suffered financial losses. The legal action seeks to represent all individuals affected by these losses.
Securities Regulation Breach
The lawsuit claims that Pump.fun violated securities regulations by failing to register the PNUT token with the US Securities and Exchange Commission (SEC).
Allegations Against Pump.fun
The filing states that Pump.fun’s ecosystem treats all tokens, including PNUT, as securities under federal law. The platform’s infrastructure is designed to control and manage all tokens, regardless of their creators, in a way that satisfies securities regulations.
Neglect of Investor Safeguards
Pump.fun is accused of neglecting essential investor safeguards such as Know Your Customer (KYC) checks, anti-money laundering protocols, and risk disclosures. These oversights reportedly allowed users to open accounts and purchase tokens within minutes without proper verification.
Legal Implications and Analysis
Crypto lawyer Gabriel Shapiro has commented on the case, highlighting Pump.fun’s reliance on closed-source, centralized systems as a potential weakness in the lawsuit defense. He contrasts this with Uniswap’s decentralized structure, which has proven effective in similar legal challenges.
Shapiro notes that the legal outcome may depend on whether Pump.fun’s operators are considered issuers of securities or brokers/promoters. This distinction could impact the magnitude of any judgment against the platform.
He suggests that platforms like Pump.fun could reduce legal risks by embracing principles of open-source transparency and decentralization. Adhering to these principles may strengthen legal defenses and potentially prevent similar lawsuits in the future.