The Fall Trilogy of Pump.fun: Legal Hunting, Coin Price 50% Slump, Trust Collapse - ChainCatcher

2025-07-25 08:32:06

Author: Zz, ChainCatcher

"The most interesting place on the Internet" - This is how three British founders born after 2000 described their project Pump.fun. Nowadays, this phrase sounds more like dark humor.

In July 2025, this once-celebrated platform that disrupted the Meme track with its "one-click issuance" model is facing an unprecedented crisis of trust and market challenges.

This company is not only facing the business pressure of losing market share to competitors and a significant decline in key data, but is also mired in legal troubles due to allegations of securities fraud and even RICO felonies in the United States. The story of Pump.fun began with fervor and is now undergoing the trials brought on by that fervor.

Breaking Point of Trust Crisis

In July 2025, a decision changed everything.

Pump.fun announced the issuance of its own token PUMP, with a fully diluted valuation of up to $4 billion. This was supposed to be a milestone in the platform's development, yet it became a turning point that shook the community's trust.

Ironically, the platform's founder previously gained credibility for the platform with the declaration that "every presale is a scam." Now, however, he has turned around to launch a large-scale presale for PUMP, an action that the community views as blatant hypocrisy and betrayal.

Jocy, the founder of the renowned venture capital firm IOSG Ventures, publicly stated on platform X that it was a high-risk "Exit Liquidity" event, believing that raising funds at a valuation of $4 billion during the altcoin downturn has seriously overdrawn the future. The market's concerns quickly became a reality.

According to CoinMarketCap data, the token's price plummeted by 75% within hours of its launch. As of the publication of this article, PUMP has dropped to 0.0024 USDT, over 30% lower than its public sale price of 0.004 USDT.

On social media, the atmosphere shifted from celebration to despair. "We thought this was an opportunity to change our fate, but it only became fuel for their luxurious yacht parties." This feeling of being deceived and harvested quickly spread, severely damaging the community foundation on which Pump.fun relies.

Share value plummets, business model faces challenges

The loss of trust is directly reflected in the bleak market data.

Competitor LetsBONK.fun is rapidly eroding its market position at an astonishing speed. According to Dune Analytics data, in just one month, Pump.fun's market share in the new coin issuance market plummeted from 90% to 24%, while LetsBONK.fun soared from 5% to 64%. Behind this is a battle of two completely different philosophies.

The model of Pump.fun is centralized pumping, while the success of LetsBONK.fun lies in its allocation of 58% of platform revenue for the repurchase and destruction of ecological tokens, thereby building a strong value and trust flywheel through tangible profit-sharing.

In the face of difficulties, CoinCentral reported that although the team announced a multi-million dollar buyback, it was mocked by the market as "using retail investors' money to buy back their own shares at a high price." Analysts pointed out that the project sold at $0.004 and then used platform revenue to buy back at $0.0064, essentially paying a 60% premium for market value management.

Although this move boosts the price of the coin in the short term, it cannot restore the severely damaged value foundation and market confidence. At the same time, the global regulatory network is tightening.

In December 2024, after receiving a warning from the UK's Financial Conduct Authority (FCA), Pump.fun was forced to block UK users, who accounted for 9% of its traffic.

This is not an isolated incident, but rather an inevitable regulatory scrutiny resulting from its "viral" growth model. Pump.fun is caught in a severe negative feedback loop: increasing competition erodes revenue, declining revenue weakens buyback ability, falling token prices damage confidence, and ultimately lead to accelerated user attrition.

RICO HUNTING

More serious challenges come from the legal level. Initially, multiple class action lawsuits alleged that all Meme coins on the platform were unregistered securities. Law firms such as Wolf Popper LLP proposed the "joint issuer" theory, arguing that the platform was deeply involved in the creation, trading, and liquidity processes of the tokens, rather than being a neutral technology provider.

In July 2025, the legal battle escalated sharply. According to the amended documents of the Aguilar case, the plaintiffs added charges based on the Racketeer Influenced and Corrupt Organizations Act (RICO) — a statute typically used to combat organized crime.

The scope of the defendants has also expanded, with the Solana Foundation, Solana Labs, and even its co-founders being classified as the "architects, beneficiaries, and accomplices" of the fraud. This move has a far greater impact than the project itself, directly questioning the boundaries of responsibility for the entire Solana ecosystem.

As a foundational infrastructure, does Solana have an obligation to review or supervise its star projects within the ecosystem? This lawsuit has made all public chain platforms realize that their relationship with ecosystem projects may be much more dangerous than they imagined. The underlying actions of the RICO charges include telecommunications and securities fraud, unlicensed money transmission, and aiding money laundering.

The most explosive allegation is that the North Korean hacker group "Lazarus Group" used Pump.fun to issue Meme coins to wash the funds stolen during the Bybit hack.

Governance defects, difficult to prevent internal thieves

However, the most shocking might be the betrayal from within.

On May 16, 2024, the platform was attacked, and approximately $1.9 million in funds was stolen. However, the attacker was not an external hacker, but a resentful former employee.

A former employee named "Stacc" publicly admitted responsibility on social platform X, with motives pointing to personal revenge and disdain for "terrible bosses." Technical analysis indicates that the attack stemmed from the abuse of management privileges rather than a smart contract vulnerability.

The employee exploited their privileged position to illegally obtain withdrawal authorization, then rapidly bought out the supply of multiple tokens through a flash loan, ultimately intercepting the initial liquidity that was supposed to enter the DEX. While publicly claiming to address the risks of Meme coins running away, their internal "backdoor" had already been wide open for disgruntled employees.

This incident is like a mirror, reflecting Pump.fun's astonishing neglect of internal security and corporate governance during its rapid development.

From solving the issue of running away to running away myself

The story begins with the "Solana Meme Coin Frenzy" that swept the globe in early 2024. Countless developers and speculators flocked to the Solana ecosystem, eager to create or capture the next hundred-fold coin. However, the process of creating a token and providing it with an initial liquidity pool (LP) is both expensive and complex, often requiring thousands of dollars in costs and expertise, which keeps countless creative and "grassroots" players out.

The main characters are three British founders born after 2000: CEO Noah Tweedale (21 years old), CTO Dylan Kerler (21 years old), and COO Alon Cohen (23 years old, using a pseudonym). They have keenly identified this core pain point and claim to solve the risk of Meme coins running away, with the vision of creating the most interesting place on the internet.

Pump.fun will debut in January 2024, with its core innovation: "One-click Token Issuance," simplifying the originally complex process to just a few clicks and a few dollars. This disruptive innovation has led to explosive growth.

But this talent quickly turned into a speculative tool. The entire business model amplifies speculative sentiment. The $4 billion valuation presale of the PUMP token has pushed this speculation to its peak.

The disregard for business rules runs throughout. They once earned trust with an anti-pre-sale stance, but then turned around and initiated large-scale pre-sales. When faced with FCA regulation, they chose to cut ties with the UK operating entity. The CEO denied that Pump.fun is a UK company, while the COO argued that an employment relationship does not represent ownership. To the public, all of this seems calculated rather than ignorant.

Technical geniuses, speculators, and rule-breakers; this complex portrait presents the complete trajectory of Pump.fun, from its rocket-like rise to its rapid fall. The young founders did not anticipate that this project, intended to bring fun, would thrust them into a complicated whirlpool of legal and business issues.

Standing at the Crossroads

Pump.fun is at a crossroads. Ongoing lawsuits, declining market share, and damaged user trust have put it in a difficult position.

This seems to be another brutal performance of "DeFi Darwinism": a species rapidly thrives due to its unique adaptability (low barriers to entry and high dissemination), only to face challenges eventually because it cannot evolve the ability to cope with complex environments (regulation, trust, security).

The predicament of Pump.fun raises a serious question for the entire crypto industry: to what extent should platforms be held accountable for the actions within their ecosystem when innovation walks the legal tightrope?

As regulatory scrutiny shifts from centralized exchanges to more complex DeFi applications, the next Pump.fun may already be brewing.

For every surfer, the ability to distinguish between fun and traps has never been more important than it is today. This story of rising from grassroots to the pinnacle and then falling from that peak may be laying the groundwork for the next chapter of the crypto world.