Pump.fun Lawsuit Escalates: Judge Greenlights Second Amended Complaint

Another round in the ring. The legal battle against memecoin launchpad Pump.fun just got a fresh set of gloves, with a judge allowing plaintiffs to file a revised complaint. This isn't a dismissal—it's a recalibration.

The Core Allegations: A Pattern or a Feature?

The lawsuit hinges on claims that have become familiar in DeFi's wilder corners. Plaintiffs argue the platform's structure and tokenomics might not just encourage speculative frenzy—they might be designed for it. Think less 'innovation' and more 'extraction.' The amended filing aims to sharpen these arguments, attempting to thread the needle between decentralized protocol and centralized liability.

Why This Move Matters

Allowing an amended complaint signals the court sees potential merit in the claims, or at least enough to warrant another look. It keeps the discovery process alive—the phase where internal documents and communications get subpoenaed. For critics, it's a step toward accountability; for supporters, it's regulatory overreach stifling permissionless innovation. The truth, as always in crypto, is probably messier than both sides admit.

The Bigger Picture: DeFi's Legal Reckoning

This case is another data point in the mounting pressure on DeFi's 'move fast and break things' ethos. Regulators and courts are increasingly unwilling to accept 'the code is law' as a legal defense when real money—and real losses—are involved. Each lawsuit like this sets a subtle precedent, chipping away at the notion of complete immunity for decentralized platforms.

A cynical take? The lawsuit itself has probably generated more attention and trading volume for the tokens involved than any marketing campaign ever could. In crypto, even bad news is a form of liquidity.

The judge's decision doesn't predict the outcome, but it ensures the fight continues. For an industry built on volatility, the legal landscape is proving to be the most unpredictable chart of all.

Allegations of the ‘Digital Slot Machine’

The plaintiffs’ suit contends that despite the site touting the fairness of token issuances on the site, the site facilitated the operation of a ‘bipartite scheme involving insiders and automated bots’ that facilitated the ability for early market participants to ‘front-run’ retail buyers of the tokens on the site.

As a result of the marketing model adopted by the site, all the tokens issued on the site subsequently dropped to zero for the benefit of users who were then left on the site, with the site netting hundreds of millions of dollars from the 99 percent of users who lost all of their funds on the site.’

The lawsuit dates back to early 2025, following a surge of complaints from investors related to the PNUT token and other volatile memecoins. Early filings focused primarily on issues concerning securities laws, claiming that the launching of the tokens on the exchange constituted an unregistered investment contract.

The initial action against Baton Corporation was sparked by allegations that Pump.fun facilitated a pump-and-dump ecosystem. The plaintiffs claimed that the platform’s structure intentionally bypassed investor protections to generate massive fee revenue from failed tokens. 

However, the litigation itself took a bizarre turn when a memecoin named “DOGSHIT2” saw a 67% price surge following reports that it was allegedly tied to the very law firm representing the victims. This connection drew scrutiny from the crypto community, as it raised questions about the optics of legal representatives potentially engaging with the same volatile market mechanisms they were critiquing in court. 

From unregistered securities to civil RICO

The lawsuit has since expanded to include civil RICO allegations in relation to the larger scheme for digital assets in which the exchange had been involved, including its infrastructure partners, solana Labs and Jito Labs. Early versions of the lawsuit had emphasized the exchange’s livestreaming service, characterized by the lawyers as infrastructure used to create artificial enthusiasm in the form of anti-social and profoundly disturbing content to facilitate volume.

The implications of the continued evolution of this second amended complaint are very serious for the decentralized finance industry at large. The court’s decision to permit claims of RICO will lead to treble damages, which can result in triple damage financial responsibility against defendants if they are found guilty of racketeering. 

The plaintiffs’ effort to include the infrastructural companies in this lawsuit has challenged the long-held industry view that blockchain developers and foundations are non-partisan actors and cannot be held accountable for the actions that take place within these infrastructures. The eventual decision of the court in favor of the plaintiffs could lead to all token launchpads being mandated to offer similar financial regulations offered by conventional exchanges. 

The court has allowed the enlarged complaint regarding Pump.fun, ensuring that the case involving the latter will be a highlight of crypto-related legal discourse throughout 2026. The evolution from a basic violation of securities laws to a complaint of racketeering practices may very well indicate a sterner approach being adopted in holding high-grossing crypto projects accountable for system-related losses.

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