## Pump.fun Dispute: From $231 Losses to Class Action Lawsuit Targeting the Solana Ecosystem

Starting from minor losses of individual investors, the Pump.fun lawsuit has escalated into an unprecedented legal dispute. With over 15,000 internal chat logs leaked, allegations have expanded from a single launch platform to the entire Solana ecosystem – including Solana Labs and Jito Labs. This is not just a dispute over losses, but a broader investigation and denial of whether "decentralization" truly exists in the crypto industry.

## **From Small Losses to a Unified Legal Front**

It all began in January 2025, when the Meme coin market was at its peak. Investor Kendall Carnahan filed the first complaint, demanding Pump.fun be held responsible for his losses after purchasing the $PNUT token. The amount involved was only $231 – seemingly insignificant.

Two weeks later, investor Diego Aguilar filed a similar complaint, but with a broader scope. Aguilar had purchased various tokens issued on Pump.fun ($FRED, $FWOG, $GRIFFAIN) representing all buyers of unregistered tokens on this platform.

The Southern District Court of New York quickly recognized the issue: both lawsuits targeted the same group of defendants (Pump.fun, Alon Cohen, Dylan Kerler, Noah Bernhard Hugo Tweedale), criticizing the same misconduct. Judge Colleen McMahon refused to allow separate trials.

On June 26, 2025, Judge McMahon officially consolidated the two lawsuits. Under the Private Securities Litigation Reform Act (PSLRA), Michael Okafor – the largest victim (losing approximately $242,000) – was appointed as the lead representative for the entire class of claimants. Those expecting losses had formed a unified legal front.

## **Targeting Solana and Jito: Statements on a "Crime Network"**

Just one month later, on July 23, 2025, the plaintiffs launched a major "bomb": the list of defendants was significantly expanded.

No longer just Pump.fun, legal actions now directly target Solana Labs, Solana Foundation, and their leadership, as well as Jito Labs and its executives.

This legal strategy is based on a strong argument: the three parties do not operate independently. Instead, they form a tight "interest community." Solana provides the blockchain infrastructure, Jito supplies MEV (Maximum Extractable Value) tools that prioritize transactions, and Pump.fun runs the platform. Together, these three create a system that appears decentralized but is actually manipulated.

Specifically, the plaintiffs allege that Jito’s MEV technology allowed "insiders" to pay extra fees to buy tokens before normal investors’ transactions were executed – a behavior called "front-running." These transactions profit risk-free by exploiting price discrepancies.

## **Five Key Allegations: From Unregistered Securities to Money Laundering**

**First Allegation: Unregistered Securities Sales**

This is the strongest legal basis of the case. The plaintiffs argue that all Meme tokens issued on Pump.fun are inherently "investment contracts" under the Howey Test – a legal standard established by the U.S. Supreme Court in 1946 to determine whether an asset qualifies as a "security."

If it meets the Howey Test (investment of money, expectation of profits, based on the efforts of others, common profits), then the asset must comply with SEC registration and disclosure requirements under the Securities Act of 1933 and 1934. Pump.fun, they claim, has completely violated this.

The platform uses a "bonding curve" (link curve) mechanism to sell tokens – a dynamic pricing model where the price increases as more tokens are sold, encouraging early purchases. However, Pump.fun did not disclose any risk information, financial status, or project goals to investors, which are mandatory for registered securities.

**Second Allegation: Operating an Illegal "Meme Coin Casino"**

The plaintiffs define Pump.fun as a "casino." The act of depositing SOL to buy tokens is essentially "gambling," with outcomes largely dependent on luck and market speculation, not intrinsic value. Pump.fun operates like a "bookmaker," charging a 1% fee on each transaction.

**Third Allegation: False Advertising**

On the surface, Pump.fun promotes "Fair Launch," "No Presale," "Rug-proof" – creating the illusion that everyone starts on equal footing. But in reality, this is deception. Court documents show Pump.fun secretly integrated Jito’s MEV technology, enabling basic front-running.

**Fourth Allegation: Money Laundering**

The plaintiffs accuse Pump.fun of receiving and transferring large sums of money without any licensing. Court documents even allege that the platform helped North Korean hacker group Lazarus Group launder money. Hackers issued the "QinShihuang" token on Pump.fun, exploiting high liquidity and volume to mix "dirty money" with legitimate investor funds.

**Fifth Allegation: Lack of Investor Protections**

Unlike traditional financial platforms, Pump.fun lacks KYC (Know Your Customer), AML (Anti-Money Laundering) procedures, and even basic age verification.

The core argument: this is not a typical investment affected by market volatility. It’s a scam system designed to cause retail investors to lose money while insiders and "insiders" profit.

## **Breakthrough Evidence: 15,000+ Internal Chat Logs**

After September 2025, the lawsuit took a different turn. A "confidential informant" (confidential informant) provided the plaintiffs with about 5,000 chat logs believed to be from internal communication channels of Pump.fun, Solana Labs, and Jito Labs.

These logs record "technical coordination" and business exchanges among the three parties – exactly what the plaintiffs need to prove a "collusive" relationship.

One month later, on October 21, the informant provided a second batch: over 10,000 chat logs and related documents. These are believed to detail:

- How Pump.fun coordinated technical integration with Solana Labs
- How Jito’s MEV tools were integrated into Pump.fun’s trading system
- Discussions among the three about how to "optimize" transaction processes (the plaintiffs call this "market manipulation")
- How insiders exploited information advantages for trading

Plaintiffs’ lawyers say these logs "expose a sophisticated scam network."

## **Final Step: RICO Allegation**

On August 21, the plaintiffs filed a "RICO Complaint" – officially accusing all defendants of constituting a "racketeering enterprise" operating a "manipulated Meme coin casino" under the guise of a "fair launch platform."

RICO (Racketeer Influenced and Corrupt Organizations Act) is a powerful law allowing prosecution of organizations engaged in ongoing criminal activities. If proven, the consequences could be severe.

## **Current Status and Unanswered Questions**

As of now, Pump.fun reports:
- Current PUMP price: $0.00 (down 78% from all-time high)
- Weekly trading volume: $481 million (down 80% from $3.3 billion in January)
- Token buyback plan: $216 million (consuming about 15.16% of circulating supply)

Compared to other cryptocurrencies:
- SOL is trading at $142.92

Alon Cohen, co-founder of Pump.fun, has not spoken publicly for over a month. Leaders of Solana and Jito remain silent.

On January 7, 2026, the plaintiffs will submit a "Second Amended Complaint" with new evidence. At that time, unresolved mysteries will be revealed:

- Who is the confidential informant? A former employee, competitor, or regulator?
- What do the 15,000 chat logs truly contain? Authentic evidence or normal business exchanges edited?
- How will the defendants defend themselves?

Interestingly, despite the growing scale of the lawsuit, the crypto market seems largely indifferent. SOL’s price remains relatively stable due to legal reasons – the price crashes are mainly due to the overall Meme coin market decline, not the lawsuit itself.

2026 will be a decisive year. When evidence is made public, the entire crypto industry will face tougher questions: Does decentralization truly exist? Does fair launch really mean fairness? Or are these just carefully crafted illusions?