Hawk Tuah Crypto Promoters Face Legal Wrath: Pump.Fun in the Crosshairs!

A cryptocurrency investor has filed a class action lawsuit against Pump.Fun, a platform for launching and investing in meme-themed digital currencies, after incurring trading losses.

Wolf Popper and Burwick Law are representing the plaintiffs, the two firms managing a distinct class action initiated by investors in December concerning a memecoin created by internet personality Haliey Welch, more famously known as the Hawk Tuah girl, which plummeted in value shortly after trading commenced. (Welch was not included as a defendant in that case.)

“These ‘emperor’s new clothes’ cryptocurrency schemes can’t continue to disguise themselves as credible finance, leaving the vulnerable at risk,” remarks Max Burwick, founding partner at Burwick Law.

Pump.Fun experienced significant success when it launched in January 2024, providing users with a means to create memecoins—extremely volatile cryptocurrencies that usually lack any intrinsic purpose besides speculation—rapidly and without charge. The recent lawsuit, submitted Thursday in the Southern District of New York, claims that Pump.Fun has functioned as an unregistered securities issuer and vendor. The lawsuit asserts that the platform’s marketing assertions diminish the probability of incurring financial losses while trading memecoins, thereby exposing investors to greater financial hazards.

Furthermore, the legal action contends that these memecoin platforms, including Pump.Fun, are structured in such a manner as to promote pump-and-dump schemes. “Initial investors or insiders artificially raise token prices through synchronized purchasing and marketing efforts, subsequently selling their holdings at peak values, which causes the token’s price to tumble and results in significant losses for subsequent investors,” the lawsuit argues.

The complaint highlights the conditions surrounding the launch of a specific Pump.Fun memecoin—PNUT, which alludes to the celebrity squirrel euthanized last year in New York—as evidence supporting its assertions.

Pump.Fun did not promptly respond to a request for remarks. However, in an interview with WIRED the previous year, Noah Tweedale, one of the three Pump.Fun cofounders mentioned in the lawsuit, rejected the notion that the platform profits from ordinary investors incurring losses. “The intent with Pump was to create something where everyone operates on an equal playing field,” Tweedale stated. “I want to emphasize that we do not wish for anyone to lose money on our platform. It does not benefit us in any way.”

More than 6 million distinct memecoins have been launched via Pump.Fun, the most successful of which are valued in the hundreds of millions of dollars. The memecoin market now exceeds a total value of $100 billion, as market data indicates.

In its first year of operation, Pump.Fun is reported by third parties to have generated over $350 million in revenue, taking a 1 percent cut from trades. The platform is projected to generate over $1 billion in revenue by 2025.

Nonetheless, the lawsuit initiated by the cryptocurrency investor—which comes in response to reports of unethical trading practices, critique regarding content moderation, and a warning issued to Pump.Fun by the UK financial authority—may jeopardize the platform’s rapid expansion.

The lawsuit centers on the argument that memecoins should, under certain conditions, be regarded as securities, a specific class of investment vehicle. The complaint asserts that by neglecting to register token sales with the Securities and Exchange Commission (SEC), the relevant US financial authority, Pump.Fun allegedly breached securities regulations and withheld investors from the necessary disclosures expected of regulated entities.