Once upon a time , Pump.fun, the Meme coin issuance platform on the Solana blockchain, was a digital amusement park that never closed, a machine that made a fortune every day. Here, with a cost of less than $2, anyone could create a new cryptocurrency in a few minutes and engage in a frenzy of speculation.
However, the noise came to an abrupt end. Today, the lights of the amusement park are turned off and it has fallen into silence. Not only is it facing multiple class-action lawsuits in the New York federal court, but its most important promotional platform, the official account of social platform X, has also been permanently banned.
The sudden fall of Pump.fun is not an isolated case. It is more like a prism, reflecting the deep internal contradictions behind the Meme coin craze. This is a head-on collision between a non-accessible, gamified financial experiment and the cold securities law, the power of life and death of centralized platforms, and the cruel laws of the market economy. Is this digital carnival a short-lived bubble, or does it foreshadow the rise of a new type of market speculative force that cannot be tamed? Its rise and fall trajectory provides us with an excellent anatomical sample.
Anatomy of a Meme Factory: Rise and Fall
The rise of Pump.fun stems from its extreme "democratization" of the threshold for financial speculation, while its fall is rooted in the inherent systemic flaws of this model.
"Innovation": Opening the casino doors to everyone
The core mechanism of Pump.fun is that it simplifies the token creation process on the Solana blockchain to the extreme, creating a one-stop platform that integrates Meme coin creation and trading. Its soul is a mathematical model called the "Bonding Curve". Under this model, the price of tokens will automatically rise as the demand for purchases increases, which not only creates huge incentives for early participants, but also provides a steady stream of fuel for speculative frenzy. This mechanism is packaged as a "fair issuance", which quickly made Pump.fun a "Meme coin casino" in the circle.
This casino business is extremely hot. The platform has built a lucrative business model by charging a 1% exchange fee for each transaction and a fee of 1.5 SOL for tokens that successfully "graduate" (that is, land on a decentralized exchange after reaching a certain market value threshold). By the beginning of 2025, the platform's cumulative fees had reached nearly $500 million, and its peak daily revenue even exceeded $15 million, making it an efficient money printing machine.
Intrinsically corrupt: A system built on deception
However, beneath the surface of prosperity lies a shocking reality. A devastating report released by risk analysis company Solidus Labs revealed that 98.6% of the tokens issued on Pump.fun showed typical characteristics of a "pump-and-dump" scam, and eventually quickly returned to zero and became worthless. This data completely tore off the platform's disguise of "innovation" and "fairness", exposing its essence as a hotbed of industrial-scale fraud.
The relationship between the platform's business model and fraudulent behavior is not a simple tacit agreement, but a deep symbiosis. Pump.fun's revenue is directly linked to the issuance and trading volume of tokens on its platform. Since the vast majority of transactions are derived from fraudulent pumps and dumps, the platform's huge revenue of nearly $500 million is actually obtained from facilitating these scams. This has formed a distorted incentive mechanism: in order to maximize revenue, the platform will inevitably prioritize lowering barriers and increasing trading volume rather than strengthening security reviews and protecting investors. This makes its so-called "fair issuance" promise particularly pale.
The platform's vulnerability has long been apparent. In May 2024, a former employee used his privileged access permissions to steal assets worth approximately $1.9 million through a flash loan attack, exposing a huge loophole in its internal control. In February 2025, its official X account was hacked and used to promote scam tokens, once again highlighting its lack of resilience to external risks. The legal filings also accuse the platform of making huge profits in an atmosphere full of illegal and antisocial content, adding a layer of moral and reputational stain to it.
2. Legal Reckoning: When Meme Coin Meets the Howey Test
When wild financial experiments touch the red line of the law, a liquidation is inevitable. In January 2025, two key class-action lawsuits were filed in the Southern District of New York Federal Court, putting Pump.fun and the entities and founders behind it on the defendant's bench.
Legal crackdown
The lawsuit was initiated by law firms such as Wolf Popper LLP and Burwick Law, and the defendants include Baton Corporation Ltd., the UK operating entity of Pump.fun, and its founders Alon Cohen, Dylan Kerler and Noah Bernhard Hugo Tweedale. The core accusation is that Pump.fun promoted and sold a large number of unregistered securities through its platform, blatantly violating the U.S. Securities Act of 1933. The plaintiffs demanded that the platform refund all investors' purchase money and compensate for the economic losses caused by it, involving an amount of nearly $500 million.
The core legal weapon of this lawsuit is the "Howey Test Test" born in 1946, which is the gold standard for determining whether an investment constitutes a "security." The plaintiffs' arguments are extremely subversive: they believe that Pump.fun is far from being a neutral technology tool provider, but a "legal seller" and "co-issuer" that actively participates in the issuance and sale of tokens.
The argument is supported by the fact that Pump.fun deeply controls the entire process from the birth to the trading of tokens: it provides standardized token creation tools, controls liquidity and pricing through the joint curve mechanism, and actively promotes these tokens using its platform and influencer partnerships. The lawsuit documents describe this model as a "new evolution of Ponzi and pump-and-dump scams." This legal strategy marks a major evolution in litigation in the cryptocurrency field. In the past, regulators usually targeted the issuers of individual tokens (such as the SEC's lawsuit against Ripple), but this approach is inefficient in the face of thousands of anonymous creators on Pump.fun. Now, the plaintiffs choose to go straight to the point - making the platform itself the responsible party. If this logic holds up in court, then any "one-click coin issuance" platform that provides standardized tools, controls pricing mechanisms, and participates in promotion may be identified as a seller of unregistered securities. This will fundamentally destroy the business model of this type of "issuance platform as a service."
Caught between two regulatory eras
The lawsuit happened to take place during a dramatic transition period of cryptocurrency regulatory policy in the United States. It was born at the end of the "enforcement regulation" era led by former U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler, a period marked by lawsuits against giants such as Coinbase and Binance, treating most crypto assets as potential securities. However, the trial of the case will be conducted under the leadership of the new administration and the new SEC Chairman Paul Atkins, who has made it clear that he will take a more friendly stance towards cryptocurrencies and plans to establish a clearer regulatory framework. Therefore, the outcome of this lawsuit is not only about the fate of Pump.fun, but also a weathervane for how the U.S. judicial system can strike a balance between two completely different regulatory philosophies.
3. Signal interruption: Lost after being banned by the platform
If legal action is a fundamental challenge to its business model, then the ban on social media is a direct cut off of its lifeline.
Digital Guillotine
The suspension of Pump.fun’s official X account and the personal account of its founder Alon Cohen is not an isolated incident, but part of X’s broad cleanup of a range of Meme coin-related accounts, including GMGN, BullX, etc. There are many different opinions on the reasons for the ban. The most credible explanation is that platforms such as Pump.fun may have illegally used shared or “black market” APIs to drive their transaction tracking and “sniping” robots, which is a direct violation of X’s terms of service. Another possibility is that in the face of Pump.fun’s increasing legal risks and fraud allegations, X platform chose to take the initiative to cut off in order to reduce its own platform liability.
This incident profoundly reveals the centralization paradox of so-called "decentralized finance." Although Pump.fun is built on the decentralized Solana blockchain, its lifeblood, such as user acquisition, community interaction, and viral marketing, is completely dependent on X, a centralized social platform. As one CEO who shared his experience on Reddit said, losing the X account is equivalent to "being silenced overnight." This exposes a fatal weakness of the entire Web3 ecosystem: its social and distribution layers are still firmly controlled by a few technology giants.
The tearing apart of the community and the shift in narrative
The collapse of the platform triggered very different reactions in the community. Some people gloated over it, thinking that Pump.fun was like a parasite that sucked the liquidity and attention of other valuable projects, and that its collapse was "a good thing" [User Query]. Other speculators (the so-called "Degen") lamented that they had lost their beloved casino and "there was nothing to play with." More forward-looking voices began to call on the market to return to rationality and turn their attention back to value construction, and even directly called out, expecting capital to rotate to the Ethereum ecosystem, "Come back, my proud Ethereum Meme season!"
4. Liquidity Black Hole and Public Chain Dispute
The rise of Pump.fun not only created countless scams, but also had a profound impact on the macro ecology of the entire crypto market, especially intensifying the competition between the two major public chains, Solana and Ethereum.
Huge consumption of liquidity
Pump.fun once occupied more than 50% of the new token issuance share in the market, and its model was like a huge "liquidity black hole". It attracted massive capital and market attention to short-term, high-risk speculative games, resulting in the marginalization of projects that truly have practical value and long-term potential, and the continuous siphoning of funds. This phenomenon distorts the effective allocation of capital, rewards marketing hype rather than technological innovation, and constitutes a huge opportunity cost for the healthy development of the entire industry. When it was reported that Pump.fun itself planned to raise $1 billion in token financing, the market was even more alarmed, worrying that this would further drain the already scarce liquidity of the ecosystem.
Solana vs Ethereum’s race
The success of Pump.fun is a direct reflection of Solana's technical characteristics. Its 65,000 transactions per second (TPS) and almost negligible transaction fees provide perfect soil for this high-frequency, low-cost speculative model. In contrast, Ethereum's high gas fees and slow speed make it difficult to replicate an equally crazy "casino".
However, with the collapse of Pump.fun, the former "killer app" of the Solana ecosystem, a power vacuum has emerged. The community's call for an "Ethereum Meme Season" is not just an emotional catharsis, but may also herald a real capital migration. Speculators are always looking for the next outlet, and Ethereum has naturally become the most watched destination with its "liquidity moat" formed by its total locked value (TVL) of up to $64 billion, a more mature ecosystem, and a large user base.
Conclusion: After the carnival, the whole place is in a mess
The story of Pump.fun is a microcosm of the entire meme coin field. It is facing legal action that challenges the foundation of its business model, and it has also suffered a social blockade that cuts off its marketing lifeline, putting it in a double desperate situation.
Its rise and fall embodies the core contradiction of the crypto world: on the one hand, the pursuit of the utopian ideal of permissionless creation and ultimate freedom, and on the other hand, the rigid demand of real society for investor protection and market order. Will the collapse of Pump.fun become a necessary market purification, pushing capital back to the track of "value investment"? Or is the pure, game-like speculative spirit so deeply rooted that it cannot be curbed?
The lights in the casino have gone out, but the gamblers haven't left. They're just looking around, looking for the next neon sign. Over the wreckage of Pump.fun hangs a huge question mark, questioning the future direction of the entire industry.
