Court allows expanded fraud claims against memecoin platform
A US federal judge allowed investors to file expanded fraud claims against Pump.fun on 9th December 2025. Pump.fun is a website that lets anyone create and trade memecoins, which are joke cryptocurrencies often based on internet memes. The lawsuit was originally filed by investors who lost money on the platform. The case accuses the company of running an organised criminal scheme under America’s anti-racketeering laws. These laws were originally created to fight organised crime like mafia operations in the United States. The legal team representing thousands of investors estimates total losses between four and 5.5 billion dollars. The lawsuit now includes Solana Labs, which operates the blockchain that Pump.fun runs on.
Lawyers describe Pump.fun as an illegal online casino disguised as a legitimate cryptocurrency trading platform. The platform launched in January 2024 and has earned over 850 million dollars in fees already. Users created more than seven million different memecoins on the website between January 2024 and March 2025. The company tried to dismiss the case but the judge rejected those attempts allowing the trial to proceed.
New evidence shows alleged coordination between insiders
The expanded lawsuit presents 5,000 private chat messages as new evidence of alleged wrongdoing. These messages allegedly show staff from Pump.fun, Solana Labs and other companies coordinating with each other. The lawsuit claims insiders received special access to buy newly created memecoins before regular users could. Pump.fun uses automated pricing that increases token prices as more people buy them progressively. Insiders allegedly bought massive quantities of tokens at the lowest starting prices using their special access. This caused prices to rise automatically, making the tokens look popular and valuable to regular users. Ordinary investors then bought tokens at higher prices believing they had equal opportunities with everyone else. Token prices typically crashed shortly afterwards, causing significant financial losses for those regular users.
The lawsuit compares this pattern to Ponzi schemes where early participants profit from later investors’ money. The platform allegedly targeted younger and inexperienced investors through social media apps like TikTok specifically. Marketing materials promised returns of 100 times or 1,000 times the original investment amount. The platform did not require identity checks, age verification or anti-money laundering procedures whatsoever. The lawsuit claims users essentially gamble money on random price movements without any regulatory oversight.
Case could change how memecoin platforms operate legally
The lawsuit transforms simple fraud allegations into a complex conspiracy case targeting Solana’s underlying technology infrastructure. If successful, the case could force major changes across the entire memecoin industry and Solana ecosystem. The investors seek repayment of their losses, return of platform fees, and additional punitive damages. Punitive damages are extra payments meant to punish wrongdoing and discourage similar behaviour in the future. The companies deny all allegations and argue they simply provide technology tools that users choose to employ. They claim they are not responsible for how individual users decide to trade on their platforms.
The case highlights growing conflicts between new cryptocurrency innovations and traditional financial regulation worldwide. Regulators increasingly scrutinise whether cryptocurrency platforms should follow the same rules as traditional stock exchanges. The lawsuit argues tokens on Pump.fun qualify as securities requiring registration with government regulators. Securities are financial investments where people put money in expecting profits from others’ work. Traditional securities like stocks require extensive legal documentation and investor protections before being sold. The case could take months or years to reach a final conclusion through the court system. Regardless of outcome, the lawsuit demonstrates increasing legal risks for unregulated cryptocurrency platforms operating in America.
