A class action lawsuit filed in federal court for the Southern District of New York accuses the memecoin platform Pump.fun of operating a fraudulent “slot machine” scheme that allegedly defrauded users of $5.5 billion. These allegations have placed Pump.fun at the center of a wide-reaching federal fraud investigation.
A class action lawsuit against Pump.fun.
Pump.fun now faces charges under the Racketeer Influenced and Corrupt Organizations (RICO) Act, a law most often employed against organized crime. This underlines the gravity of the case against both the platform’s operators and its wider partners.
Memecoin platform allegedly runs like a casino
According to the lawsuit, Pump.fun’s business model rewarded early participants at the expense of those who joined later. Plaintiffs claim the scheme lacked real projects or products—focusing instead on rapid cycles of buying, dumping, and inevitable price collapse.
The complaint names not just Pump.fun’s operators (including a developer known as Bernie and parent company Baton Corp.), but also leading Solana ecosystem partners: Solana Labs, Solana Foundation, Jito Labs, and Jito Foundation.
Prosecutors allege these entities collectively operated an enterprise functioning as an unlicensed casino, relying on volatility and hype rather than disclosure or investor protection.
Key accusations against Solana and Jito
The legal filing also details the alleged roles of Solana Labs and the Solana Foundation, claiming they provided the core blockchain infrastructure and profited from transaction fees, validator rewards, and the rising value of the SOL.
Jito Labs and the Jito Foundation reportedly earned profits by manipulating the order of transactions for memecoins on Pump.fun, allegedly prioritizing their own trades to maximize gains.
Major investors exit amid turmoil
As legal battles intensify, the project’s largest early investors have begun rapidly selling off their holdings. On July 22, two major wallets—“PUMP Top Fund 1” and “PUMP Top Fund 2”—transferred more than $160 million in tokens to exchanges, effectively liquidating most of their positions. One wallet now retains only $29.5 million worth of tokens.
The $PUMP price has dropped below its private/public sale price of $0.004.
“PUMP Top Fund 1″ spent 100M $USDC to buy 25B $PUMP at $0.004 in the private sale.
So far, he has deposited 17B $PUMP($89.5M) to exchanges via #FalconX and still hold 8B $PUMP($29.58M).“PUMP Top Fund… pic.twitter.com/xibWUaCOxz
— Lookonchain (@lookonchain) July 22, 2025
According to a BitMEX report, nearly 60% of PUMP presale participants have sold their tokens. Analysts link this selloff to the project’s large initial token supply, putting downward pressure on prices despite a high-profile launch.
It’s been almost 1 week since the @pumpdotfun ICO💊
From 10,145 participants who contributed $448.5M:
➡️59.6% sold or transferred
➡️37.4% continue to HODL
➡️3% increased their holdingsOur quant reveals traders are still BULLISH on $PUMP. Read on👇https://t.co/mIH0MN8Tby pic.twitter.com/pFdAa2FXfH
— BitMEX (@BitMEX) July 17, 2025
Pump.fun raised $500 million in an ICO that lasted just 12 minutes—a record-setting number now being cited as possible evidence for prosecution rather than as a sign of success.
Pump.fun representatives have not yet issued a public response to the new allegations. With major investors exiting and ongoing regulatory action, the case could have far-reaching consequences for the memecoin space and the broader Solana ecosystem.
eToro: Best platform for beginners and social trading
- Trade cryptocurrencies, stocks, ETFs, and commodities on one easy-to-use platform
- Follow and copy top-performing traders with eToro’s unique social trading tools
- Earn passive income with staking on popular coins like ETH, ADA, and TRX
- Fully regulated in multiple jurisdictions with strong security protocols
- 0% commission on real stock trading and competitive spreads on crypto
- 30+ million registered users across 100+ countries
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong.0
Source:: Pump.fun Turned Into a ‘Slot Machine’: $5.5 Billion Lawsuit Threatens Entire Solana Ecosystem