Solana-based meme coin platform Pump.fun is at the center of ANOTHER scandal and legal battle after a class action lawsuit accused it of operating an unauthorized securities exchange. Filed in the Southern District Court of New York, the lawsuit claims that Pump.fun’s parent company, Baton Corporation, facilitated the creation and sale of unregistered securities, potentially putting the entire $50 billion meme coin market under regulatory scrutiny.

The lawsuit, Aguilar v. Baton Corp. Ltd., specifically references three tokens—First Convicted Raccoon (FRED), FWOG, and GRIFFAIN—alleging that Pump.fun’s automated tools consistently produced securities under the Howey Test. This test, used to determine whether an asset qualifies as a security, examines whether an investment is made in a common enterprise with expectations of profit driven by the efforts of others.

Court documents suggest that Baton Corporation collected nearly $500 million through a mandatory 1% fee on all transactions, benefiting from what regulators claim were securities law violations. The complaint further alleges that Pump.fun maintained centralized control through standardized templates, pricing mechanisms, and liquidity management. If proven in court, this could set a precedent for whether automated token creation platforms inherently engage in securities trading.

Baton Corporation executives, including CEO Noah Tweedale, CTO Dylan Kerler, and COO Alon Cohen, have remained largely silent on the matter. Cohen declined to comment when approached by Decrypt, while the other co-founders have yet to respond publicly.

A Platform Under Fire

The lawsuit comes as Pump.fun continues to dominate the meme coin sector. The platform, launched in September 2024, quickly became one of the fastest-growing crypto apps, generating $100 million in revenue in record time. By allowing users to create and trade meme tokens with minimal effort, Pump.fun became a hub for viral crypto trends. However, critics argue that its rapid expansion has contributed to market oversaturation and increased speculative risks.

This is not the first controversy surrounding Pump.fun. The platform faced significant backlash in November 2024 after reports surfaced of users broadcasting disturbing content via its livestream feature. These included cases of animal cruelty, self-harm, and violent threats. The fallout forced Pump.fun to disable livestreaming entirely, but the scandal further tarnished its reputation.

The legal scrutiny against Pump.fun intensified in January 2025 when a second class action lawsuit was filed, further alleging that the platform engaged in securities fraud. Led by Burwick Law and Wolf Popper LLP, this lawsuit claims that Pump.fun’s business model functions as an evolved Ponzi and pump-and-dump scheme, extracting millions from investors through misleading marketing and influencer-backed token launches.

Max Burwick, founder of Burwick Law, has been vocal about the risks posed by platforms like Pump.fun, likening them to multi-level marketing scams that exploit market hype and digital engagement. His firm has actively encouraged affected investors to come forward and is pursuing damages for financial losses.

Despite mounting legal and reputational challenges, Pump.fun continues to generate substantial revenue. Data from Dune Analytics indicates that as of January 31, the platform has amassed nearly $500 million, with weekly earnings reaching $47 million. However, with the lawsuits progressing and regulatory pressure increasing, the platform’s future remains uncertain.

Baton Corporation has until February 20 to respond to the allegations. If the lawsuits gain traction, they could have far-reaching implications for automated token launchpads and the broader meme coin economy.

Pump.fun: The Danger of Meme Coin Mania in a Decentralized World | HODL FM
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