Solana Memeseason Fades As Pump.fun Faces $500M Lawsuit Over Alleged Scams

Ronaldo Marquez

3 weeks ago

3 mins read

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On-chain analyst OxChain addressed the official ban of the Solana-based blockchain Pump.fun from the social media site X (formerly Twitter). This action follows a $500 million lawsuit filed against the platform and its founders, which could signal the end of the recent wave of Solana (SOL) memecoins.

Pump.fun Banned From X

The ban, which affected co-founder Alon Cohen and over 20 associated accounts, was attributed to violations of X’s rules. Initial speculations suggest that the platform may have engaged in API scraping to front-run meme tokens, but the lawsuit from Diego Aguilar, filed in January 2025, presents more serious allegations.

The lawsuit claims that Pump.fun facilitated the sale of alleged “unregistered securities,” effectively enabling “pump-and-dump” schemes across numerous tokens.

At the heart of the controversy is the platform’s operational model. Pump.fun launched tokens primarily through bonding curves, which reportedly allowed for “price manipulation and speculation” without providing users with any substantive whitepaper or utility.

This approach, according to the analyst, turned the Solana-based platform into what some have described as a “centralized casino,” rather than a truly decentralized space for memecoins.

Legal experts argue that Pump.fun’s founders—Noah Tweedale, Alon Cohen, and Dylan Kerler—may be held accountable under securities law. This is due to their direct involvement in the issuance and marketing of tokens, which could classify these assets as securities under the Howey Test.

$1 Billion Fundraising Effort Stalls

The allegations against Pump.fun extend beyond financial improprieties. The platform reportedly hosted offensive tokens and lacked adequate moderation, allowing harmful content to proliferate. This could have serious legal ramifications, especially given the current regulatory environment focused on protecting investors.

Financially, Pump.fun had amassed significant trading volume, peaking at $3.3 billion, and generated nearly $500 million in fees, primarily in Solana. However, less than 1% of the tokens launched on the platform actually had any legitimate use case, raising questions about the sustainability of such a model.

The implications for the broader crypto market are substantial. With the Securities and Exchange Commission (SEC) forming a dedicated task force to investigate memecoins and increasing scrutiny on platforms operating in this space, OxChain believes that the regulatory landscape is likely to become much more stringent.

The timing of the ban also coincides with a planned $1 billion fundraising effort by Pump.fun, suggesting that regulatory pressure is mounting just as the platform was aiming for significant growth.

Lastly, the analyst asserted that with figures like Elon Musk, the social media site’s owner, tightening controls on crypto-related tools on X, the environment for meme-based tokens is shifting rapidly.

The downfall of Pump.fun not only illustrates the challenges faced by decentralized finance but also highlights the growing maturity of the cryptocurrency market.

When writing, SOL trades at $140, recording losses of nearly 20% in the monthly time frame, according to CoinGecko data.

Featured image from DALL-E, chart from TradingView.com

Ronaldo Marquez

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