Crypto project Solana and Pump.fun accused in expanded RICO complaint for alleged $5.5 billion meme coin gambling scam
In a significant development, a class action lawsuit against Pump.fun and its infrastructure partners, including Solana Labs, Solana Foundation, Jito Labs, and Jito Foundation, has progressed with an amended complaint. The lawsuit, filed in the Southern District of New York, alleges that these entities operated a coordinated racketeering enterprise akin to an unlicensed casino, extracting over $5.5 billion from users through deceptive digital asset schemes involving memecoins.
At the heart of the allegations is the claim that Pump.fun and its partners engaged in a coordinated enterprise functionally similar to a "front-facing slot machine cabinet," benefiting from volatility and hype rather than providing genuine investor protections. The complaint further alleges that the platform allowed early buyers to profit by dumping tokens on later investors, with no underlying project, product, or sustainable revenue.
The amended complaint includes charges under the Racketeer Influenced and Corrupt Organizations Act (RICO), fraud, aiding and abetting, civil conspiracy, and unjust enrichment. Solana-affiliated entities are accused of facilitating Pump.fun's activities by providing blockchain infrastructure and profiting from user transactions through validator fees and token appreciation.
Andrew Rossow, a public affairs and reputation management attorney, stated that platforms often described as neutral may not be insulated from legal exposure. He further emphasised that platforms facilitating activities in a legal gray zone can expect to be in the spotlight.
The lawsuit names more than a dozen defendants, including executives from all four entities involved. The plaintiffs are seeking the rescission of all Pump.fun transactions and compensatory damages for the alleged harms. The legal proceedings are aimed at addressing the significant financial losses incurred by retail traders and the broader implications of unregulated digital asset schemes.
It's important to note that as of the time of the filing, the case remains untested in court. The lawsuit estimates user losses from meme coin activity across Pump.fun and related venues at between $4 billion and $5.5 billion. Pump.fun reached a $2 billion market cap earlier this month following a $600 million token launch.
This is not the first time Burwick Law, the firm representing the plaintiffs, has taken legal action against crypto platforms and token launches. They have also brought actions related to the Hawk Tuah token and $LIBRA token. The complaint against the Hawk Tuah token alleges that it resulted in over $100 million in losses and a U.S. court-ordered freeze of $58 million in USDC.
The lawsuit describes Pump.fun as a "front-facing slot machine cabinet" used for mass-producing and promoting tokens with no disclosure or investor protections. Jito is accused of enabling front-running through MEV tooling and validator control. The lawsuit alleges that the meme coin ecosystem operated by Pump.fun functioned like a digital slot machine, extracting billions from retail users.
The current status of the lawsuit is ongoing with the recent amendments expanding the scope of alleged misconduct. The legal proceedings are aimed at addressing the significant financial losses incurred by retail traders and the broader implications of unregulated digital asset schemes.
- The complaint against Pump.fun claims that they operated like a "front-facing slot machine cabinet," benefiting from cryptocurrency volatility and hype, rather than providing proper investor protections.
- The amended complaint alleges that the platform allowed early buyers to profit from later investors, with no legitimate project, product, or sustainable revenue.
- Solana-affiliated entities are accused of facilitating Pump.fun's activities by providing blockchain infrastructure and benefiting from user transactions through validator fees and token appreciation.
- Andrew Rossow, a public affairs and reputation management attorney, stated that platforms facilitating activities in a legal gray zone can expect to be in the spotlight.
- The lawsuit names more than a dozen defendants, including executives from all four entities involved, and seeks the rescission of all Pump.fun transactions and compensatory damages for the alleged harms.
- The legal proceedings are aimed at addressing the significant financial losses incurred by retail traders and the broader implications of unregulated digital asset schemes, especially in the casino-and-gambling sector.
