Pump.Fun Faces Legal Action Amid Controversial Token Issuance Plans

• Pump.Fun faces a class action lawsuit for allegedly running an illegal securities exchange, raising concerns for the meme coin market.
• Despite denying token pump rumors, Pump.Fun is reportedly planning a Dutch auction on CEXs, fueling speculation among investors.
• Solana’s market struggles as large $SOL sales, partly linked to Pump.Fun, put pressure on investor sentiment and future stability.

Pump.Fun, a Solana-based meme coin factory, is under intense scrutiny following rumors and legal actions surrounding its automated tools. The company, known for enabling the launch of thousands of unregistered tokens, now faces a class action lawsuit for operating an illegal securities exchange. 

The lawsuit, filed in New York, accuses Pump.Fun’s parent company, Baton Corporation, of violating securities laws. Allegedly, the company collected nearly $500 million in mandatory fees over every transaction while assisting creators in launching over 50, 000 tokens.

Rumors of Token Issuance and Dutch Auction Plans

Despite rumors suggesting a potential token pump, Pump.Fun has clarified that these claims are false. The company emphasized that any information related to token issuance must come directly from their official channels. While Pump.Fun has primarily focused on improving its product, the team has remained committed to rewarding users. 

However, recent revelations show that Pump.Fun plans to issue a token via a Dutch auction, to be conducted on centralized exchanges (CEXs). Multiple sources, including WuBlockchain and exchange staff, have confirmed the details, though the exact timing remains unclear.

Legal and Regulatory Implications for the Meme Coin Market

The class action lawsuit, Aguilar v. Baton Corp. Ltd., cites three tokens—First Convicted Raccoon (FRED), FWOG, and GRIFFAIN—as examples of how Pump.Fun’s platform contributed to securities law violations. 

These tokens allegedly met the criteria of the Howey Test, which determines whether a transaction qualifies as an investment contract. The lawsuit argues that Pump.Fun enabled the launch of tokens that could be considered securities , thus potentially exposing the $50 billion meme coin market to heightened regulatory scrutiny.

Solana’s Struggles Amid Pump.Fun’s Actions

Meanwhile, Solana’s market performance faces increased pressure , with large sales of $SOL tokens weighing down investor sentiment. Although Solana had previously been viewed positively, the recent selling activity was partly driven by Pump.Fun, casts doubt on the platform’s future. 

Whale movements and substantial token dumps seem to indicate that some major players are targeting Solana. As these actions continue, investors are left wondering whether Solana can maintain its support levels, especially given its uncertain future.