Solana, Pump.fun Named in Amended RICO Suit Alleging $5.5B Meme Coin Gambling Scheme
The evolving world of cryptocurrency faces yet another legal scrutiny as a class action lawsuit filed in the Southern District of New York alleges that Pump.fun, along with Solana Labs, the Solana Foundation, Jito Labs, and Jito Foundation, are engaged in a coordinated racketeering enterprise. This enterprise purportedly resembles an unlicensed digital casino, drawing billions from users through speculative meme coin trading.
The lawsuit, presented by Burwick Law, accuses Pump.fun of acting as a “front-facing slot machine cabinet,” designed to mass-produce and promote tokens without disclosure or investor protections. These actions allegedly facilitated anonymous token launching and trading, bypassing identity checks in what the plaintiffs describe as a structurally manipulated environment.
The complaint elaborates on how “platforms like Pump.fun automate this dynamic through bonding-curve pricing, anonymous wallet access, and priority trading for insiders and bots,” effectively turning the platform into “a form of unlicensed, zero-sum gambling where the odds are overwhelmingly against the average participant.”
The lawsuit is now in the public domain, but remains unproven in court. Legal experts often point out that in the U.S., the ability to file a lawsuit with extensive claims exists, though many may not progress beyond early stages. The allegations target more than a dozen defendants, including executives from the four involved entities. User losses from meme coin activities via Pump.fun and affiliated platforms are estimated to range between $4 billion and $5.5 billion.
The plaintiffs make their claims under the Racketeer Influenced and Corrupt Organizations (RICO) Act, alleging the defendants organized an illegal gambling enterprise and unauthorized money transmission scheme. Additional allegations include wire fraud, false advertising, unregistered securities offerings, and deceptive practices in violation of New York consumer law.
Burwick Law is no stranger to crypto-related litigation, having previously filed multiple lawsuits against crypto platforms and token launches. Earlier this year, they filed a lawsuit against Pump.fun following the collapse of the PNUT meme coin, accusing fraudulent promotion via influencers. Other cases tied to Burwick include actions involving the Hawk Tuah token and $LIBRA, allegedly endorsed by Argentina’s President Javier Milei and leading to significant financial losses.
A key point in the complaint revolves around the assertion that Solana and Jito were active participants in the enterprise rather than neutral infrastructure providers. Jito faces allegations of enabling front-running through MEV tooling and validator control, while Solana Labs and the Solana Foundation are accused of monetizing user activities via blockspace fees and SOL appreciation.
Andrew Rossow, a public affairs and reputation management attorney, underscores the potential impact of such lawsuits on public perception, stating, “Reputation is everything. Whether you’re a blockchain juggernaut or a startup running on caffeine and code, all it takes is one lawsuit to shift the public narrative. Public trust moves markets.”
Pump.fun’s rapid ascension in the crypto sphere is notable, having reached a $2 billion market cap recently following a $600 million token launch. Its user-friendly interface and minimal entry barriers have made it a significant player in Solana’s on-chain activities.
Considering the implications for infrastructure providers like Solana and Jito, Rossow points out that platforms often deemed neutral may still face legal challenges. He remarks, “I hear it time and again: ‘We’re just the tech provider’ or ‘the engineer.’ But if your rails are facilitating activities in a legal gray zone, expect to be in the spotlight, sometimes unwillingly. Permissionless doesn’t mean beyond reproach.”
As this lawsuit progresses in the judicial system, it remains a topic of keen interest among crypto enthusiasts and legal experts alike. The case not only highlights the complexities and potential pitfalls of operating in the evolving digital currency landscape but also serves as a reminder of the inherent risks tied to cryptocurrency ventures.
