Pump.fun Accused of Running ‘Unlicensed Casino’ in $5.5B Class Action Lawsuit

Solana-based memecoin platform Pump.fun is facing a consolidated class action lawsuit alleging that it operates an illegal “Meme Coin Casino,” which has inflicted estimated losses of between $4 billion and $5.5 billion on retail traders while generating over $722 million in revenue.

The lawsuit, filed in the United States District Court for the Southern District of New York, targets the Pump.fun operator, Baton Corporation, its founders Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale, as well as executives from Solana Labs, the Solana Foundation, and Jito Labs.

Plaintiffs Diego Aguilar, Kendall Carnahan, and Michael Okafor allege the defendants formed a “Pump Enterprise” that operates as a coordinated racketeering scheme under the Racketeer Influenced and Corrupt Organizations Act.

The complaint describes Pump.fun as the “front-facing slot machine cabinet” where users deposit SOL currency for unpredictable token outcomes.

The platform allegedly allows minors to engage in speculative trading without requiring age verification or Know Your Customer (KYC) screening.

Jito Labs is accused of “rigging the games” by monitoring profitable transactions and sending them to the highest bidders through Maximal Extractable Value bundling.

Solana Labs and the Solana Foundation allegedly provide the blockchain infrastructure and monetize each wager through the sale of block space and validator fees.

The lawsuit claims the enterprise promoted a deceptive “fair launch” narrative while allowing insider front-running through Jito bundles.

The platform faces additional allegations of facilitating intellectual property theft, including tokens that impersonate publicly traded companies like Apple, Tesla, and Meta, as well as celebrity names without authorization.

The Lazarus Group, a sanctioned cybercrime unit, allegedly used Pump.fun to launder $1.08 million from cryptocurrency theft.

According to a report that Cryptonews covered earlier in June, Pump.fun was accused of extracting $741 million in fees from users since May 2024, selling approximately 4.1 million SOL tokens through the Kraken exchange.

Pumpfun(@pumpdotfun), recently suspended by X, has sold a total of ~4.1M $SOL($741M) at an average price of ~$180 since May 19, 2024.

264,373 $SOL was sold for 41.64M $USDC at $158.

3.84M $SOL($699M) was deposited to #Kraken at $182. pic.twitter.com/LB80CZgnUB

Meanwhile, 99.6% of its 13.55 million trader addresses have failed to realize profits exceeding $10,000.

The platform collects a 1% transaction rake on every trade and recently introduced a 0.05% revenue-sharing model for token creators.

Court documents reveal Pump.fun earned over $400 million in fee revenue during 2024 alone from the alleged gambling enterprise. Jito Labs captured over $633 million in user-paid tips, becoming one of the most profitable entities in the Solana ecosystem.

The company builds the “Jito-Solana Block Engine” that sells preferential block-inclusion rights and captures MEV on behalf of Solana stakers.

Solana Labs and the Solana Foundation saw a substantial financial windfall as SOL’s price surged over 1,000% from 2022 lows by late 2024.

Both entities control large SOL reserves and operate validators, earning considerable rewards from increased blockchain activity.

The lawsuit identifies 20 specific “Pump Tokens” as unregistered securities, including StakeCoin, QuStream, DeepCore AI, and Apex AI.

https://t.co/BB5leCKHRh allegedly sold unregistered securities disguised as meme tokens.#Pump.fun #memecoins #UnregisteredSecuritieshttps://t.co/gNnyRynRWx

These tokens allegedly promised “real-world utility and value tied to future project success” without SEC registration or risk disclosures. Lead plaintiff Michael Okafor lost approximately $242,076 when his purchased tokens collapsed.

The platform processes over $66 billion in cumulative trading volume while launching an estimated 27,305 new tokens daily.

Pump.fun’s native PUMP token launched in July 2025 but crashed 30% within 24 hours from pre-market highs of $0.0072 to $0.005 amid aggressive whale shorting.

The token has lost nearly 50% of its value since launch, falling short of community expectations.

Founder Alon Cohen confirmed during a recent livestream that no immediate token airdrop is planned, causing PUMP to drop over 14% in 24 hours.

https://t.co/45JfH1EnrU's native PUMP token declined 14% in the last 24 hours and plummeted more than 40% in the last 7 days.#Pump.Fun #PUMPtoken #AlonCohenhttps://t.co/F1D08oREbp

The token currently trades at $0.0031, with multiple presale investors dumping their positions due to losses exceeding $1 million.

X platform suspended Pump.fun’s official account and Cohen’s personal account in June 2025, raising questions about potential SEC investigations or securities law violations. The platform has also faced multiple lawsuits alleging violations for selling unregistered securities disguised as meme tokens.

Competitor LetsBonk has captured a sizable market share, achieving a daily share of 44.87% compared to Pump.fun’s 43.73%.

Plaintiffs seek class certification, compensatory damages, treble damages under RICO violations, appointment of a federal equity receiver, and permanent injunctions preventing defendants from operating similar platforms without required licenses and compliance controls.

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