Forwarding the original title “The Casino Lights Out: Pump.fun is being ‘Double Choked’, Is the End of Meme Coin Here?”

The sudden downfall of Pump.fun is not an isolated case; it resembles a prism, refracting the profound internal contradictions behind the Meme coin frenzy. This is a head-on collision between an unrestricted, gamified financial experiment and the cold realities of securities law, centralized platforms’ control over life and death, and the harsh laws of market economics. Is this digital carnival merely a fleeting bubble, or does it herald the rise of a new, untameable force of market speculation? Its rise and fall provide us with an excellent dissection sample.

1. Anatomy of the Meme Factory: Rise and Decay

The rise of Pump.fun is rooted in its extreme “democratization” of the financial speculation threshold, while its decline is rooted in the inherent systemic flaws of this model.

“Innovation”: Opening the casino doors to everyone

The core mechanism of Pump.fun lies in its extreme simplification of the token creation process on the Solana blockchain, creating a one-stop platform that integrates Meme coin creation and trading. Its essence is a mathematical model known as the “Bonding Curve.” Under this model, the price of the token automatically rises with increasing purchase demand, which not only creates significant incentives for early participants but also provides a continuous fuel for speculative frenzy. This mechanism is packaged as a “fair issuance,” quickly making Pump.fun known in the community as the “Meme coin casino.”

The casino business is exceptionally hot. The platform has built a lucrative business model by charging a 1% exchange fee on each transaction and a fee of 1.5 SOL for tokens that successfully “graduate” (i.e., after reaching a certain market capitalization and listing on decentralized exchanges). By early 2025, the cumulative fees collected by the platform have approached $500 million, and its peak daily revenue has even exceeded $15 million, making it a highly efficient money-printing machine.

Inherent Decay: A System Built on Deception

However, beneath the prosperous facade lies a shocking reality. A devastating report released by risk analysis company Solidus Labs reveals that as much as 98.6% of the tokens issued on Pump.fun exhibit typical characteristics of the “Pump-and-Dump” scheme, ultimately plummeting to zero and becoming worthless. This data completely strips away the platform’s facade of “innovation” and “fairness,” exposing its essence as a breeding ground for industrial-scale fraud.

The relationship between the platform’s business model and fraudulent activities is not simply one of tacit approval, but rather a deep symbiosis. The revenue of Pump.fun is directly tied to the issuance and trading volume of tokens on its platform. Since the vast majority of transactions stem from fraudulent pump-and-dump schemes, the platform’s enormous revenue of nearly $500 million is essentially derived from facilitating these scams. This creates a distorted incentive mechanism: in pursuit of maximizing revenue, the platform inevitably prioritizes lowering barriers and increasing trading volume, rather than enhancing security checks and protecting investors. This renders its so-called “fair issuance” commitment particularly hollow.

The platform’s vulnerabilities have long been exposed. In May 2024, a former employee exploited their privileged access to steal assets worth approximately $1.9 million through a flash loan attack, revealing significant flaws in its internal controls. In February 2025, its official X account was hacked to promote scam coins, further highlighting its inadequate ability to defend against external risks. Legal documents also accuse the platform of profiting immensely in an environment rife with illegal and antisocial content, adding a layer of moral and reputational stain.

II. Legal Liquidation: When the Meme coin encounters the Howey Test

When wild financial experiments touch the red line of the law, a reckoning is inevitable. In January 2025, two key class action lawsuits were filed in the Southern District of New York federal court, placing Pump.fun and its underlying entities and founders on the defendant’s bench.

Legal crackdown

The lawsuit was initiated by law firms such as Wolf Popper LLP and Burwick Law, with defendants including the UK operating entity of Pump.fun, Baton Corporation Ltd., as well as its founders Alon Cohen, Dylan Kerler, and Noah Bernhard Hugo Tweedale. The core allegation is that Pump.fun promoted and sold a large number of unregistered securities through its platform, in blatant violation of the Securities Act of 1933 in the United States. The plaintiffs are demanding the platform refund all purchase amounts to investors and compensate for the economic losses incurred, involving amounts of up to nearly $500 million.

The core legal weapon of this lawsuit is the “Howey Test,” which was born in 1946. It is the gold standard for determining whether an investment constitutes a “security.” The plaintiffs’ argument is highly disruptive: they believe that Pump.fun is far from a neutral technology tool provider, but rather an actively participating “statutory seller” and “co-issuer” in the issuance and sale of coins.

This argument is supported by the fact that Pump.fun deeply controls the entire process of token creation to trading: it provides standardized token creation tools, controls liquidity and pricing through a joint curve mechanism, and actively promotes these tokens through its platform and partnerships with influential figures. The lawsuit documents describe this model as a “new evolution of Ponzi and pump-and-dump schemes.” This legal strategy marks a significant evolution in cryptocurrency litigation. In the past, regulators typically targeted individual token issuers (such as the SEC’s lawsuit against Ripple), but faced with thousands of anonymous creators on Pump.fun, this approach is inefficient. Today, plaintiffs choose to strike at the heart of the matter—holding the platform itself accountable. If this logic holds in court, then any platform that provides standardized tools, controls pricing mechanisms, and participates in promotion could be deemed as sellers of unregistered securities. This would fundamentally destroy the business model of such “issuance platform as a service.”

Caught between two regulatory eras

This lawsuit happens to take place during a period of drastic transformation in U.S. cryptocurrency regulatory policies. It originated at the end of the “enforcement-centric” era led by former SEC Chairman Gary Gensler, which was marked by lawsuits against giants like Coinbase and Binance, viewing most crypto assets as potential securities. However, the case will be heard under the leadership of the new government and the new SEC Chairman Paul Atkins, who has made it clear that he will adopt a more favorable stance towards cryptocurrencies and plans to establish a clearer regulatory framework. Therefore, the outcome of this lawsuit is not only related to the fate of Pump.fun but will also serve as a barometer for how the U.S. judicial system balances two distinctly different regulatory philosophies.

3. Signal Interruption: Getting Lost After Being Banned by the Platform

If legal litigation is a fundamental challenge to its business model, then the ban on social media is a direct severing of its lifeline.

Digital Guillotine

The official X account of Pump.fun and the personal account of its founder Alon Cohen have been suspended, which is not an isolated incident but part of a broad cleanup action by the X platform targeting a series of Meme coin-related accounts (including GMGN, BullX, etc.). There are various theories about the reason for the bans. The most credible explanation is that platforms like Pump.fun may have violated the terms of service by using shared or “black market” APIs to drive their trading tracking and “sniping” bots, which directly contravenes X’s terms of service. Another possibility is that, in the face of increasing legal risks and fraud allegations against Pump.fun, the X platform chose to proactively sever ties to reduce its own platform liability.

This event profoundly reveals the centralization paradox of so-called “decentralized finance.” Although Pump.fun is built on the decentralized Solana blockchain, its lifelines such as user acquisition, community interaction, and viral marketing completely rely on X, a centralized social platform. As a CEO shared on Reddit, losing an X account is akin to being “silenced overnight.” This exposes a fatal weakness in the entire Web3 ecosystem: its social and distribution layers are still firmly controlled by a few tech giants.

The tearing and narrative shift of the community

The collapse of the platform has triggered vastly different reactions within the community. Some people take pleasure in its downfall, believing that Pump.fun is like a parasite that drained liquidity and attention from other valuable projects, and its demise is “a good thing” [User Query]. Other speculators (the so-called “Degen”) lament that they have lost their beloved casino, saying “there’s nothing to play with.” Meanwhile, more forward-thinking voices are beginning to call for a return to rationality in the market, refocusing on value creation, and even directly urging for capital to rotate back to the Ethereum ecosystem, saying, “Come back, my proud Ethereum Meme season!”

4. Liquidity Black Holes and the Battle of Public Chains

The rise of Pump.fun has not only created countless scams but has also had a profound impact on the macro ecology of the entire crypto market, especially intensifying the competition between the two major public chains, Solana and Ethereum.

The massive consumption of liquidity

Pump.fun once occupied over 50% of the new token issuance share in the market, its model resembling a giant “liquidity black hole.” It attracted massive capital and market attention to short-lived, high-risk speculative games, leading to the marginalization of projects that truly have practical value and long-term potential, with funds being continuously siphoned off. This phenomenon distorts the effective allocation of capital, rewarding marketing hype rather than technological innovation, posing a huge opportunity cost to the healthy development of the entire industry. When news broke that Pump.fun itself planned to raise $1 billion in token financing, alarm bells rang in the market, raising concerns that this would further drain the already scarce liquidity of the ecosystem.

The Race Between Solana and Ethereum

The success of Pump.fun is a direct reflection of the technical characteristics of Solana. Its transaction processing capability of up to 65,000 transactions per second (TPS) and almost negligible transaction fees provide the perfect soil for this high-frequency, low-cost speculative model. In contrast, Ethereum’s high Gas fees and slower speed make it difficult to replicate a similarly crazy “casino.”

However, with the collapse of Pump.fun, a once “killer app” in the Solana ecosystem, a power vacuum has emerged. The community’s call for the “Ethereum Meme Season” is not just an emotional outburst, but may also herald a real migration of capital. Speculators are always on the lookout for the next opportunity, and Ethereum, with its total locked value (TVL) of up to $64 billion, its “liquidity moat,” a more mature ecosystem, and a large user base, naturally becomes the most prominent destination.

Conclusion: After the carnival, it’s a mess everywhere.

The story of Pump.fun is a microcosm of the entire Meme coin sector. It faces legal lawsuits that challenge the foundation of its business model and suffers from social blockades that cut off its marketing lifeline, falling into a double predicament.

Its rise and fall epitomizes the core contradiction of the crypto world: on one hand, the utopian ideal of pursuing permissionless creation and ultimate freedom; on the other hand, the rigid demand of real society for investor protection and market order. Will the collapse of Pump.fun become a necessary market cleansing, pushing capital back onto the track of “value investment”? Or has that pure, gamified spirit of speculation already taken root and become uncontainable?

The casino lights have gone out, but the gamblers have not left the scene. They are merely looking around, searching for the next place where the neon lights will shine. Above the remnants of Pump.fun hangs a huge question mark, interrogating the future direction of the entire industry.

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1. This article is reproduced from [MarsBit] The original title is “The Casino Lights Out: Pump.fun is being ‘Double Strangled’, is it the end of Meme coins?”, copyright belongs to the original author [Luke, Mars Finance], if there are any objections to the reprint, please contactGate Learn teamThe team will process it as soon as possible according to the relevant procedures.
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