Pump.fun Charged with Operating an ‘Unauthorized Casino’ in $5.5 Billion Class Action Lawsuit

The Solana-based memecoin platform Pump.fun is currently facing a consolidated class action lawsuit that claims it operates an unlawful “Meme Coin Casino,” allegedly causing estimated losses ranging from $4 billion to $5.5 billion for retail traders while generating over $722 million in revenue.

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

Source: Court Document

Alleged Crime Empire

The plaintiffs, Diego Aguilar, Kendall Carnahan, and Michael Okafor, assert that the defendants established a “Pump Enterprise” that functions as a coordinated racketeering operation under the Racketeer Influenced and Corrupt Organizations Act.

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

It is claimed that the platform permits minors to participate in speculative trading without necessitating age verification or Know Your Customer (KYC) checks.

Jito Labs is accused of “rigging the games” by tracking profitable transactions and directing them to the highest bidders via Maximal Extractable Value bundling.

Solana Labs and the Solana Foundation are alleged to provide the blockchain infrastructure and profit from each wager through the sale of block space and validator fees.

The lawsuit contends that the enterprise propagated a misleading “fair launch” narrative while enabling insider front-running through Jito bundles.

Additional allegations against the platform include facilitating intellectual property theft, encompassing tokens that mimic publicly traded companies such as Apple, Tesla, and Meta, as well as celebrity names without authorization.

The Lazarus Group, a sanctioned cybercrime organization, is said to have utilized Pump.fun to launder $1.08 million obtained from cryptocurrency theft.

Platform’s Financial Success Built on User Losses and Regulatory Violations

A report previously covered by Cryptonews in June indicated that Pump.fun was accused of extracting $741 million in fees from users since May 2024, having sold 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

— Lookonchain (@lookonchain) June 17, 2025

Meanwhile, 99.6% of its 13.55 million trader addresses have not managed to achieve profits exceeding $10,000.

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

Court documents reveal that Pump.fun generated over $400 million in fee revenue during 2024 alone from the alleged gambling operation. Jito Labs secured over $633 million in user-paid tips, establishing itself as one of the most lucrative entities within the Solana ecosystem.

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

Solana Labs and the Solana Foundation experienced a significant financial boost as SOL’s price increased over 1,000% from its 2022 lows by late 2024.

Both entities hold substantial SOL reserves and operate validators, earning considerable rewards from heightened 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

— Cryptonews.com (@cryptonews) January 31, 2025

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

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

Legal Battles Escalate as Token Launch Fails to Meet Expectations

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

The token has nearly lost 50% of its value since its launch, not meeting community expectations.

Founder Alon Cohen confirmed during a recent livestream that no immediate token airdrop is planned, leading to a 14% drop in PUMP within 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

— Cryptonews.com (@cryptonews) July 24, 2025

The token is currently trading at $0.0031, with several presale investors liquidating their positions due to losses exceeding $1 million.

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

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

The plaintiffs are seeking class certification, compensatory damages, treble damages under RICO violations, the appointment of a federal equity receiver, and permanent injunctions to prevent the defendants from operating similar platforms without the necessary licenses and compliance measures.

The post Pump.fun Accused of Running ‘Unlicensed Casino’ in $5.5B Class Action Lawsuit appeared first on Cryptonews.