From a loss of 231 USD to a "nuclear bomb" 15,000 messages: The Pump.fun lawsuit is reshaping the Solana market

The Meme coin market in 2025 is an endless race. When former President Trump launched the TRUMP token, a frenzy of speculation swept across the entire industry. Amidst the legendary “coin x100” hype capturing all attention, a quiet lawsuit was initiated – and now it is developing into a legal battle that could reshape the entire Solana ecosystem.

Alon Cohen, co-founder of Pump.fun, has been absent from social media for over a month. For someone who is usually very active, this is a concerning sign. Transaction data reflects a sharp decline: weekly trading volume from a peak of 3.3 billion USD (in January) has dropped to 481 million USD today – an 85% decrease. The PUMP token has plummeted from its high to 0.0019 USD, losing over 78% of its value. This is in stark contrast to July when Pump.fun publicly sold at 0.004 USD/token, selling out in 12 minutes and raising 600 million USD. Despite the gloomy market, the Pump.fun team continues its daily buyback plan, spending a total of 216 million USD, consuming 15.16% of the circulating supply.

The story begins with a small loss

In January 2025, investor Kendall Carnahan filed a lawsuit in the Southern District of New York against Pump.fun and three founders. The reason: he lost 231 USD when buying $PNUT on this platform. Carnahan alleges Pump.fun sold unregistered securities, violating the Securities Act of 1933.

Just two weeks later, investor Diego Aguilar filed a similar suit but with a broader scope – targeting all Meme coins issued on the ($FRED, $FWOG, $GRIFFAIN…) platform. These two lawsuits target Baton Corporation Ltd (the operating company) and three founders: Alon Cohen (COO), Dylan Kerler (CTO), Noah Bernhard Hugo Tweedale (CEO).

Merged lawsuits, main plaintiff lost 242,000 USD

Judge Colleen McMahon quickly recognized the overlap: same defendants, same violations, why try separately? On June 18, she directly questioned the plaintiff’s lawyer.

Although initially proposing to keep the two cases separate, Judge McMahon disagreed. This “divide and conquer” strategy not only wastes judicial resources but could also lead to conflicting rulings. Most importantly, all plaintiffs face the same core issue: they are victims of the same scam system.

On June 26, Judge McMahon ordered the two cases to be consolidated. Under the Private Securities Litigation Reform Act (PSLRA), Michael Okafor – the one who suffered the largest loss (about 242,000 USD) – was appointed lead plaintiff. From this point, a united front of individual investors was formed.

Solana Labs and Jito become targets

One month after consolidation, on July 23, the plaintiff filed an “Amended Consolidated Complaint” with a significantly expanded list of defendants. This time, the focus not only on Pump.fun but also directly on core members of the Solana ecosystem:

Solana Labs, Solana Foundation, and their leaders: The plaintiff accuses Solana of not just providing blockchain technology. Court documents reveal close technical coordination between Pump.fun and Solana Labs, far beyond the typical developer-platform relationship.

Jito Labs and its leaders: Jito’s MEV technology allows insiders to pay extra fees to prioritize their transactions, enabling them to buy tokens ahead of regular users and profit risk-free.

The plaintiff aims to demonstrate that Pump.fun, Solana, and Jito do not operate independently but form a tightly interconnected community: Solana provides infrastructure, Jito supplies MEV tools, Pump.fun runs the platform – three parties building a system that appears decentralized but is actually manipulated.

Core allegations: a sophisticated scam system

This is not just a group of angry investors suffering losses. Hundreds of court documents reveal accusations targeting a carefully designed scam system.

First: Unregistered securities sales

The legal basis of the entire lawsuit lies here. The plaintiffs argue that all Meme tokens on Pump.fun are fundamentally investment contracts. According to the Howey Test (established by the U.S. Supreme Court in 1946 to determine if a transaction is a “security”), these tokens meet the definition of securities. However, the defendants never filed registration with the SEC but openly sold tokens to the public, violating Sections 5, 12(a), and 15 of the Securities Act of 1933.

The platform uses a “bonding curve” mechanism but fails to disclose risk information, financial status, or project background – all mandatory disclosures for registered securities.

Second: Operating an illegal gambling enterprise

The plaintiffs define Pump.fun as a “Meme coin casino.” User deposits SOL to buy tokens, which is essentially “placing bets,” with outcomes mainly dependent on luck rather than token value. The platform acts as a “casino,” charging a 1% fee per transaction.

Third: False advertising

Pump.fun promotes “Fair Launch,” “No Presale,” “Rug-proof” to create a sense of fairness. But court documents reveal Pump.fun secretly integrated Jito Labs’ MEV technology. Insiders willing to pay extra “tips” can use “Jito bundles” to buy tokens ahead of regular users, then sell when prices rise – a form of front-running.

Fourth: Money laundering and unlicensed fund transfers

Pump.fun receives and transfers large sums without any licensing. Court documents claim the platform even helped North Korean hacker group Lazarus Group launder money. Hackers issued Meme tokens “QinShihuang,” exploiting Pump.fun’s high traffic to mix “dirty money” with legitimate small investors’ funds.

Fifth: Lack of investor protection

Pump.fun lacks “Know Your Customer” (KYC) procedures, anti-money laundering (AML) protocols, and even basic age verification.

Core argument: this is not just a volatile investment; it is a scam system designed to cause small investors to lose money while insiders profit.

Unveiling the entire network: RICO Act and anonymous whistleblower

On August 21, the plaintiffs filed an “RICO Complaint” accusing all defendants of forming a “racketeering organization,” operating a “manipulated Meme coin casino” under the guise of a “fair launch platform.”

But what is the evidence?

After September, an “anonymous whistleblower” provided the plaintiffs’ legal team with the first batch of internal chat logs – about 5,000 messages. These logs are believed to be from internal communication channels of Pump.fun, Solana Labs, and Jito Labs, documenting technical coordination and exchanges among the three parties.

The appearance of this evidence made the plaintiffs’ side feel like they hit the jackpot. Previously, all accusations were mere speculation without direct proof. These internal logs could prove a “collusive relationship” among the three.

One month later, on October 21, the whistleblower provided a second batch of over 10,000 chat logs and related documents. These records detail:

• How Pump.fun coordinated technically 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 plaintiff claims this is a euphemism for market manipulation)
• How insiders exploited transaction information advantages

The plaintiffs’ lawyers say these logs “expose a sophisticated scam network.”

Upcoming: Second amended complaint

On December 9, the court approved the request to file a “Second Amended Complaint.” But a new challenge arises: over 15,000 logs need to be reviewed, filtered, translated, and analyzed for legal significance – an enormous workload. With Christmas and New Year holidays approaching, the legal team lacks sufficient time.

On December 10, the plaintiffs filed for an extension. Just one day later, Judge McMahon approved. The new deadline is January 7, 2026.

Current status and open questions

The lawsuit has lasted nearly a year, but the real battle is just beginning. On January 7, the plaintiffs will submit the “Second Amended Complaint” with all new evidence. Then, we will see what the 15,000 chat logs truly reveal.

The defendants remain strangely silent. Alon Cohen is absent from social media, and Solana and Jito leaders have not publicly responded. Interestingly, despite the escalating lawsuit, the crypto market seems largely indifferent. Solana’s price has not moved due to the lawsuit, with the PUMP token currently at 0.00 USD, down 6.30% in 24 hours, mainly due to the Meme coin collapse story rather than direct legal impact.

Conclusion

What started as a $231 loss has evolved into a legal war targeting the entire Solana ecosystem. It touches on core industry issues: Does decentralization truly exist or is it just an illusion? Is fair launch genuinely fair?

Many questions remain unanswered: Who is the mysterious whistleblower? What do the 15,000 logs really contain? How will the defendants defend themselves? In 2026, with the second amended complaint and ongoing proceedings, perhaps we will find the answers.