From boom to chaos: how a lawsuit against Pump.fun exposes the truth behind a manipulated Solana ecosystem

The Deafening Silence of the Founders and the Collapse of PUMP

In early 2025, as the speculative Meme coin market reached all-time highs driven by the frantic launch of presidential tokens, a quiet demand was beginning to take shape in the courts. Today, more than a year later, the numbers speak for themselves: the weekly volume of Pump.fun plummeted from $3.3 trillion in January to just $481 million, a devastating 80% drop. The PUMP token, which was sold at $0.004 during its public offering in July, now trades at $0.0019, reflecting an approximate 78% loss from its all-time high.

While the market wobbles, Alon Cohen, co-founder and COO of Pump.fun, has disappeared from social media for over a month. For someone known for always “navigating the drama,” this silence is particularly revealing. It’s no coincidence: the legal team faces what could be the most significant battle in the Solana ecosystem in years.

When It All Began: A $231 Investment That Sparked the Fire

The legal saga begins on January 16, 2025, when investor Kendall Carnahan files the first lawsuit in the Southern District of New York. His claim is straightforward: after investing in $PNUT on the platform, he experienced losses and accuses Pump.fun of selling unregistered securities, violating the U.S. Securities Act of 1933. The irony: his actual loss was only $231.

Two weeks later, on January 30, Diego Aguilar files a similar lawsuit, but with a broader scope. Aguilar invested in multiple tokens such as $FRED, $FWOG, and $GRIFFAIN, turning his case into a class action covering all investors who purchased unregistered tokens on the platform.

The defendants were identical in both lawsuits: Baton Corporation Ltd (the operating company), and its three founders — Alon Cohen (COO), Dylan Kerler (CTO), and Noah Bernhard Hugo Tweedale (CEO).

The Judge Says “No”: Case Merging and a New Player

When Judge Colleen McMahon reviewed both lawsuits, she identified an obvious problem: why try two nearly identical cases separately? On June 18, 2025, she directly questioned the plaintiffs’ attorneys. The lawyers attempted to argue that they could keep two separate proceedings, one focused on $PNUT and another on all Pump.fun tokens, but the judge categorically rejected this strategy.

On June 26, McMahon issued her ruling: both cases were merged. More importantly, under the Private Securities Litigation Reform Act (PSLRA), she formally appointed Michael Okafor as the lead plaintiff. The reason? Okafor was the biggest loser, with approximately $242,000 in losses, a figure that significantly exceeded that of other angry meme investors struggling to recover their funds.

The Bombshell: Expanding the Case to Solana and Jito

One month after the merger, on July 23, 2025, the plaintiffs launched a surprising legal maneuver. They filed a “Consolidated Amended Complaint” that dramatically expanded the list of defendants beyond Pump.fun. Now on the stand were Solana Labs, Solana Foundation, and their executives, as well as Jito Labs and its leaders.

The accusation was clear: these three were not independent entities but parts of a coordinated network. Solana provided the blockchain infrastructure, Jito supplied MEV technology, and Pump.fun operated the platform. Together, the plaintiffs argue, they built a system that appeared decentralized but was meticulously manipulated.

The Allegations: Fraud from the Start

The complaints are not generic grievances from speculative investors who lost money. Court documents reveal a system accused of structured fraud:

First: Unregistered securities sales
All Pump.fun Meme tokens are essentially investment contracts under the famous Howey Test of 1946. They meet the definition of “securities” but were never registered with the SEC. The platform publicly sold these tokens via bonding curves without disclosing risks, financial information, or project backgrounds — information required in any legitimate securities issuance.

Second: Operating an unlicensed casino
The plaintiffs define Pump.fun as a “Meme coin casino.” When users exchange SOL for tokens, they are essentially betting. The platform, as the “house,” takes a 1% commission on each transaction, exactly like a betting house.

Third: Fraud and deceptive advertising
Pump.fun promotes “Fair Launch,” “no pre-sale,” and “rug pull proof.” Total lies, according to the accusation. In reality, it secretly integrated Jito Labs’ MEV technology, allowing insiders to pay additional “tips” to buy tokens before regular users, then sell after the price rises — riskless arbitrage via front-running.

Fourth: Money laundering without a license
The plaintiffs accuse Pump.fun of transferring massive sums without a transfer license, even facilitating money laundering for the North Korean hacker group Lazarus Group. A specific case mentions a Meme token called “QinShihuang” issued by hackers to mix “dirty” funds with legitimate small investor money.

Fifth: Total lack of protections
Pump.fun lacks KYC, AML, or even basic age verification.

The Treasure Trove of Evidence: 15,000 Chat Records and a Mysterious Whistleblower

After September 2025, the case moved into uncharted territory. A “confidential informant” provided the plaintiffs’ lawyers with approximately 5,000 lines of internal chat logs from Pump.fun, Solana Labs, and Jito Labs communication channels.

These records allegedly document technical coordination and business relationships among the three entities. To the plaintiffs, it was pure gold: all accusations of technical collusion lacked direct evidence until then.

One month later, on October 21, the mysterious informant delivered a second batch: more than 10,000 additional records detailing:

• Technical integration coordination between Pump.fun and Solana Labs
• Integration of Jito’s MEV tools into the transaction system
• Discussions about “process optimization” (viewed by the plaintiffs as market manipulation)
• How insiders exploited informational advantages

On December 9, the court approved the plaintiffs’ request to file a “Second Amended Complaint” to include this new evidence. But the challenge was colossal: 15,000 records needed to be reviewed, selected, translated, and legally analyzed. With Christmas approaching, the legal team requested an extension.

On December 11, Judge McMahon approved the extension, setting January 7, 2026, as the new deadline.

The Market Remains Unfazed, but a Storm Is Brewing

Curiously, despite the magnitude of the case, the crypto market has shown remarkable indifference. Solana’s price has not experienced significant fluctuations, and PUMP continues to decline more due to the overall collapse of the Meme coin narrative than the direct impact of the lawsuit.

However, the real battle is just beginning. When the “Second Amended Complaint” is filed in January 2026, it could contain revelations that redefine the entire Solana ecosystem’s perception.

Unanswered Questions Awaiting Resolution

As the case moves toward 2026, fundamental questions remain unresolved:

Who is the informant? A remorseful ex-employee? A competitor? An infiltrator from regulators?

What do those 15,000 records truly reveal? Irrefutable evidence of conspiracy or just decontextualized business communications?

How will the accused defend against such a volume of internal documentation?

This lawsuit, born from angry meme investors losing money on speculative tokens, has evolved into an existential questioning of the Solana ecosystem: is decentralization real or just a carefully packaged illusion?

The answers will come when the court reveals what is hidden in those chat logs.