By Nermeen Nabil Khear 
It sounded almost impossible to believe when news broke about PumpFun’s lawsuit. A single investor losing $231 on a PNUT token sparked a legal case. But as lawyers dug deeper, they uncovered something much bigger—and much more alarming.
If you’re holding any memecoins—or even watching the space—you must understand what’s happening with Pumpfun’s lawsuit.
The Heavy Accusations
PumpFun is a trading platform, and the lawsuit describes it as an “ecosystem of fraud.” Here’s what they said:
- Pump-and-Dump Schemes: Token hypes attract buyers for blockchain assets, only to encourage the founders to sell out and make gains.
- No KYC or AML Protections: Users weren’t required to verify their identities, opening the door to illegal activities.
- Targeting Vulnerable Groups: The platform allegedly marketed to minors and other at-risk audiences.
BREAKING: PumpFun Corp sued in NY court for alleged pump-and-dump schemes, poor KYC/AML protections, and marketing to minors. pic.twitter.com/5nWBWNY5Wn
— Cointelegraph (@Cointelegraph) January 17, 2025
The most shocking part? Some tokens on PumpFun promoted hate speech, racial slurs, and even school shootings.
Who’s Behind PumpFun?
The lawsuit centers on PumpFun’s three founders:
- Noah Tweedale (CEO)
- Alon Cohen (COO)
- Dylan Kerler (CTO)
The claim is they pocketed millions in fees while overseeing what regulators might call a fraud-fueled platform.
Behind PumpFun are three founders:
• Noah Tweedale (CEO)
• Alon Cohen (COO)
• Dylan Kerler (CTO)The lawsuit accuses them of running an “ecosystem of fraud” while pocketing millions in fees. #PumpFun pic.twitter.com/fEJM8sM1JI
— Tom Bibiyan
(@realtombibiyan) January 17, 2025
The Howey Test Problem
Things get dicey here: the lawsuit argues that PumpFun violated the Howey Test. This is a legal test that helps to define whether a certain asset is a security. The claims are:
- Investors expected gains out of PumpFun due to the created hype.
- Many tokens served no purpose at all other than sheer gambling.
- PumpFun’s marketing was solely responsible for the tokens’ success.
If the tokens, as mentioned earlier, are deemed securities, several exchanges might seek to delist them for legal reasons. And that could mean big trouble for memecoins.
99.1% of memecoins on PumpFun are SCAM!
Here’s how to tell a scam (and find a real GEM).
Full guide + Secret Tips
pic.twitter.com/E3TGRTecdF
— Alex Mason
△ (@AlexMasonCrypto) January 18, 2025
Why This Matters to You
PumpFun’s lawsuit isn’t the first of its kind. 2018 EtherDelta’s founder settled for $388K after running an unregistered exchange. Yet, PumpFun’s situation is more grave, with claims of $500M in fraud.
If the lawsuit succeeds, regulators might shut down memecoins. Any punishments would shake up the entire crypto industry. If exchanges begin delisting tokens, your coins might suffer the consequences.
Etherdelta, one of the first “DEXs,” was launched way back in 2016. The front-end was shuttered in 2018 after the SEC cracked down on the founders, but the smart contracts still operate.
Today they still hold $42M in assets, most of which I think people simply forgot about pic.twitter.com/snmMzmuRFv
— Conor (@jconorgrogan) February 4, 2023
Conclusion
PumpFun’s lawsuit could make or break memecoins. Whether it results in tougher rules or improves the industry, one thing’s for sure: This case serves as an alarm for everyone in crypto.
Disclaimer
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted risk tolerance levels of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses you may incur due to any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
The post Why PumpFun’s Lawsuit Could Affect Your Coins appeared first on Altcoin Buzz.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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