An expanded class action lawsuit accuses the memecoin platform Pump.fun and the Solana ecosystem of jointly operating an illegal digital casino-allegations that are denied by the defendants.
The plaintiffs filed the consolidated complaint on 22 July 2025 in the US District Court for the Southern District of New York. They estimate retail investor losses at between USD 4 and 5.5 billion. According to the complaint, Pump.fun built a coordinated racketeering enterprise under the guise of a memecoin launchpad. This allegedly violates US securities laws and the Racketeer Influenced and Corrupt Organizations Act (RICO). Judge Colleen McMahon has now ruled that the plaintiffs may file a second amended complaint. The deadline is 19 December 2025. If successful under RICO, the defendants could face treble damages.
The plaintiffs significantly expanded the lawsuit originally filed on 30 January 2025. At that time, it was directed solely against Pump.fun’s operating company, Baton Corporation Ltd., and its three co-founders. Today, Solana Labs, the Solana Foundation, and senior executives from both ecosystems are also named as defendants. These include Solana co-founders Anatoly Yakovenko and Raj Gokal, as well as Solana Foundation President Lily Liu. The expanded complaint consolidates two separate proceedings and adds claims under the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal statute originally designed to combat organized crime. The court fully dismissed Jito Labs, the Jito Foundation, and their CEO Lucas Bruder and COO Brian Smith from the case in late September 2025.
Subscribe to our newsletter
The best articles of the week, directly delivered into your mailbox.
Pump.fun as a “digital casino” with more than 850 million dollars in revenue
Plaintiffs’ attorneys from Burwick Law and Wolf Popper describe Pump.fun as a “digital casino.” Since its launch in January 2024, the platform has generated more than USD 850 million in fee revenue. It allows users to create and trade memecoins without identity verification. Between January 2024 and March 2025, users launched more than 7 million tokens on the platform. According to the complaint, 98.6 percent of these collapsed into worthless projects. The platform charges a 1 percent fee on all token transactions. The plaintiffs argue that this constitutes a problematic business model. The defendants have not publicly commented on the allegations to date.
Three entrepreneurs in their early twenties run the operating company Baton Corporation Ltd., which is based in London: CEO Noah Bernhard Hugo Tweedale (21), CTO Dylan Kerler (21), and COO Alon Cohen (23). The complaint names all three individually as defendants. Under Section 15 of the Securities Act, they are alleged to be jointly liable as control persons. The lawsuit accuses the founders of knowingly creating a platform that offers securities without SEC registration. They allegedly failed to provide investor disclosures or risk warnings.
Allegations of illegal gambling, wire fraud, and money laundering
The consolidated complaint expands the original securities allegations to include serious RICO accusations. According to the plaintiffs, Pump.fun and Solana formed a “Pump Enterprise.” This criminal association allegedly engaged in systematic wire fraud, securities fraud, and unlicensed money transmission. The coordinated interaction between these entities purportedly made it possible to circumvent regulatory safeguards, scale operations, and disregard consumer protection requirements.
According to the complaint, Solana Labs and the Solana Foundation provided the blockchain infrastructure that enabled Pump.fun’s business model in the first place. Since its launch in January 2024, the platform has generated cumulative fee revenue exceeding USD 850 million. The plaintiffs argue that the platform exhibits the characteristics of illegal gambling. Users wager money on random events (token price movements) without regulatory oversight. Whether this characterization is legally accurate remains for the court to determine. Jito Labs has not been part of the proceedings since September 2025. Its MEV protocol was originally described in the complaint as part of the alleged “Pump Enterprise.”
Securities law claims and the Howey Test
In addition to the RICO allegations, the complaint asserts that the tokens traded on Pump.fun constitute securities under the Howey Test. This test, applied by the SEC, defines a security as an investment contract in which investors invest money in a common enterprise with an expectation of profits derived from the efforts of others.
The plaintiffs argue that Pump.fun users purchase tokens expecting their value to increase due to the platform’s marketing efforts and network effects. The complaint accuses the defendants of offering and selling these securities without SEC registration, in violation of Sections 5(a) and 5(c) of the Securities Act. In addition, Pump.fun allegedly failed to provide prospectuses or risk disclosures. The expanded complaint adds claims under New York General Business Law §§ 349 and 350 (deceptive business practices) as well as unjust enrichment claims. The plaintiffs seek damages, restitution of fees, and punitive damages.
Jito dismissal and leaked chat logs
Since its filing in July 2025, the case has seen several significant developments. On 30 September 2025, Judge Colleen McMahon fully dismissed Jito Labs, the Jito Foundation, and CEO Lucas Bruder and COO Brian Smith from the case. The dismissal was voluntary, based on a request by the plaintiffs dated 26 September 2025. There was no settlement payment or other consideration. Prior to this, on 5 September, the law firm Skadden, representing Jito Labs, filed a motion to dismiss, arguing that the plaintiffs had failed to allege that Jito Labs had “any relationship to, involvement in, or control over the Pump.fun platform.”
Jito Labs exited the proceedings shortly after plaintiffs’ attorneys, according to court documents, obtained more than 5'000 internal chat logs from a confidential informant. These logs allegedly document direct contact between Solana Labs engineers and Pump.fun personnel. According to the plaintiffs, the logs contain discussions about “token program behavior, validator and priority inclusion paths, or launch flow mechanics.” The plaintiffs claim that this evidence supports the coordination allegations and strengthens “the foundation for the predicate acts” underlying the RICO claim. In a letter to the court, the plaintiffs stated that they intended to “narrow the case” and focus on Pump.fun and Solana. Several defendants, including Pump.fun (Baton Corporation), Solana Labs, and the Solana Foundation, filed motions to dismiss in September 2025. These motions initially remained pending.
Court decision in December: second amended complaint allowed
On 16 December 2025, Judge Colleen McMahon granted the plaintiffs’ motion to file a second amended complaint. The decision allows attorneys from Burwick Law and Wolf Popper to formulate new allegations regarding the platform’s architecture. The plaintiffs argue that the system was not designed to function as a fair marketplace. Instead, they allege it was engineered to extract maximum profit from non-accredited traders. The defendants are expected to challenge this interpretation in their forthcoming motions to dismiss.
The court set the deadline for filing the second amended complaint for 19 December 2025. Defendants must file their motions to dismiss by 23 January 2026. Plaintiffs must submit their oppositions by 13 February 2026. Approval of the second amended complaint means that the motions to dismiss filed in September 2025 could become moot. Affected defendants include Pump.fun, Solana Labs, and the Solana Foundation.
The plaintiffs base their revised complaint on more than 5'000 internal chat logs obtained from a confidential informant. These logs are said to document direct coordination between Solana Labs engineers and Pump.fun employees. The RICO allegations open the door to treble damages. With estimated losses of up to USD 5.5 billion, potential claims could reach USD 16.5 billion.
No clear-cut case
The proceedings are now at a decisive stage. With the second amended complaint, the attorneys can refine their allegations based on the leaked chat logs. The forthcoming motions to dismiss in January 2026 will determine whether the courts consider the RICO allegations and securities law violations sufficiently substantiated. The case could become a landmark for the regulatory treatment of memecoin platforms and the liability of blockchain infrastructure providers.
For Solana Labs and the Solana Foundation, the stakes are not limited to financial exposure. Their reputation as a leading layer-1 blockchain within the crypto ecosystem is also at risk. However, the defendants are likely to pursue several substantive lines of defense. In recent cases, courts have increasingly interpreted the application of the Howey Test to decentralized token platforms restrictively. In rulings involving Ripple and Coinbase, courts did not classify secondary market transactions as securities offerings.
In addition, technology providers such as Pump.fun typically argue that they merely provide neutral infrastructure and cannot be held responsible for tokens created by users. This is comparable to a web hosting provider not being liable for content hosted on its websites. The SEC itself has signaled under the new administration that it intends to significantly scale back its crypto enforcement strategy. This further complicates the legal basis for such lawsuits.
