Pump.fun, a prominent platform for the creation and trading of memecoins on the Solana blockchain, has been slapped with a cease and desist letter by US law firms Burwick Law and Wolf Popper LLP.
The legal notice, issued on February 5, 2025, accuses Pump.fun of allowing the deployment of tokens that infringe on the firms’ intellectual property rights.
The core of the letter demands the immediate cessation of activities related to tokens like “DOGSHIT2,” which, according to the law firms, misuse their names and logos.
“Our firms have no affiliation, endorsement, or ownership interest in the Dogshit2 token or any related assets. Simply put, our firms have not launched any memecoins onchain,” the companies said in a statement.
FOR IMMEDIATE RELEASE
Burwick Law and Wolf Popper LLP Demand Baton Corp. DBA, PumpFun Immediately Remove Tokens Deployed On The Solana Blockchain By Pumpfun That Utilize Unlicensed Intellectual Property In An Effort to Impersonate Our Law Firms, And Remove The Likeness Of Any…
Market manipulation allegations
Besides intellectual property violations, the law firms also criticize Pump.fun for contributing to deceptive market practices.
The firms argue that by allowing tokens like “DOGSHIT2” to exist, Pump.fun enables a marketplace where investors can be misled or deceived, potentially losing significant sums of money due to these false associations.
Moreover, the letter suggests that Pump.fun’s platform has been used to intimidate clients and disrupt ongoing litigation by deploying tokens that impersonate plaintiffs in related lawsuits.
Such actions, according to the law firms, represent a misuse of blockchain technology, turning it into a tool for undermining justice.
Two lawsuits have been filed against Pump.fun
The cease and desist follows two class-action lawsuits filed by the same law firms against Pump.fun.
The first, filed on January 16, 2025, claimed that the platform facilitated the sale of unregistered securities through the promotion of the Peanut the Squirrel token.
The second lawsuit, filed on January 30, expanded these allegations, directly naming Baton Corporation Ltd., the operator of Pump.fun, and several key figures associated with the platform.
These lawsuits allege that Pump.fun has been running a business model akin to a pump-and-dump scheme, where tokens are hyped to high valuations before their value plummets, leaving investors in the lurch.
The platform is accused of profiting significantly, with claims suggesting that nearly $500 million in fees have been extracted from traders.
As of now, Pump.fun has not issued an official statement in response to the cease and desist letter or the broader allegations.
Impact of Pump.fun’s legal disputes on the memecoins market
The legal and intellectual property disputes surrounding Pump.fun have immediate and potentially long-term implications for the memecoin market.
In the short term, the controversy has paradoxically boosted the price of tokens like Dog shit going nowhere (DOGSHIT2), which has experienced a 261.9% surge in value within 24 hours of the cease and desist letter’s issuance.
This reflects the highly speculative and volatile nature of memecoins, where even negative publicity can fuel speculative trading.
However, the broader market impact includes a potential shift in investor confidence. The allegations of unregistered securities and market manipulation could lead to a more cautious approach from both retail and institutional investors.
If Pump.fun is found liable, it might face substantial fines or operational restrictions, which could deter the creation of new tokens on the platform, thereby reducing liquidity and market depth.
Furthermore, these legal actions highlight the regulatory risks associated with memecoin platforms.
The SEC’s scrutiny over whether these tokens should be classified as securities could lead to stricter compliance requirements, possibly affecting the ease with which new memecoins are launched.
This might result in a slowdown in the growth of the memecoin segment, as platforms might need to adopt more rigorous investor protection measures, like KYC and AML protocols, to continue operations legally.
The memecoin market might also see a shift towards more established or regulated platforms, potentially benefiting competitors who have already navigated these regulatory waters.
Over time, this could lead to a more mature market environment but at the cost of the current wild-west appeal that attracts many to memecoins.
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