The firms claim Pump.fun allowed the creation of tokens impersonating their names and clients in an ongoing lawsuit. Meanwhile, Public Citizen called for a federal investigation into Donald Trump’s promotion of his own TRUMP meme coin due to potential ethics violations and foreign influence concerns. Despite these controversies, the CFTC, under acting chair Caroline Pham, announced a shift away from regulation by enforcement.
Pump.fun Faces Allegations of Investor Fraud and IP Misuse
Pump.fun, the Solana-based meme coin creation platform, is facing legal trouble after receiving a cease and desist letter from US law firms Burwick Law and Wolf Popper. The firms allege that Pump.fun has been allowing the creation of tokens that unlawfully use their names and logos, along with those of their employees and clients involved in an ongoing lawsuit against the platform.
Burwick Law stated on social media that it demanded the immediate removal of Dog Shit Going NoWhere (DOGSHIT2) and other tokens that impersonate the firms due to the unlicensed use of intellectual property. Managing Partner Max Burwick stated that since the class-action filing last week, over 200 infringing tokens have been created using their and their co-counsel’s branding. Despite the apparent financial and legal risks, Burwick Law claims that Pump.fun has the technical capability to remove these tokens but chose not to act.
The cease and desist letter also accuses Pump.fun of working with third parties to intimidate plaintiffs and interfere with ongoing litigation. The firm even alleged that blockchain technology is being weaponized to disrupt justice and due process, and believes the creation of meme coins that impersonate plaintiffs is part of these efforts. Baton, the UK-based company allegedly behind Pump.fun, has not commented on the allegations yet.
Burwick also addressed the speculation that his firm created DOGSHIT2 as part of its case against Pump.fun. He denied any involvement, and explained that the token previously existed only as “memory on the server” and was only deployed on-chain when a buyer purchased it.
The legal battle stems from a proposed class-action lawsuit that was filed on Jan. 30 by investor Diego Aguilar in a New York federal court. The lawsuit claims that every token created on Pump.fun is an unregistered security and that the platform generated close to $500 million in fees through its operations.
The complaint also accuses Pump.fun of using aggressive guerilla marketing tactics to create artificial urgency around highly volatile tokens, which led to major losses for retail investors. The plaintiffs are seeking rescission of all token purchases, monetary damages for affected investors, and litigation costs.
Pump.fun weekly volume (Source: Dune Analytics)
Despite the mounting legal challenges, Pump.fun is still seeing very impressive activity. Last week, the platform recorded an all-time high of $3.3 billion in weekly trading volume. This success was mainly driven by the launch of Trump family-themed meme coins.
Public Citizen Calls for Probe Into TRUMP Meme Coin
Meme coins are also causing some trouble for US President Donald Trump. Public Citizen, a consumer advocacy organization, recently called for a federal investigation into Donald Trump’s promotion of his meme coin.
In a letter to the US Department of Justice and the Office of Government Ethics, the organization accused Trump of soliciting gifts while in office, which is an action that may breach federal laws. The letter urged officials to investigate whether foreign state actors were purchasing the Official Trump (TRUMP) meme coin and whether his promotion of the token constituted an improper solicitation.
Public Citizen also referred to a 2012 Congressional Research Service report, and acknowledged that US presidents are largely exempt from restrictions on receiving gifts, but still pointed out that Trump’s actions may still violate ethical guidelines if he solicited funds. The organization pointed to his continued promotion of the meme coin on his social media platform, Truth Social, and suggested that he was asking for money in exchange for nothing of tangible value, which could constitute an ethics violation.
For now, the legal implications of these accusations are still very uncertain, especially considering the 2024 US Supreme Court decision that granted presidents presumptive immunity from prosecution for official acts. Even if the Justice Department or the Office of Government Ethics determined that Trump violated federal laws, he could be shielded from prosecution unless the meme coin promotion is classified as an unofficial act. Public Citizen Financial Policy Advocate Bartlett Naylor stated that the organization is exploring other legal avenues.
Public Citizen called for several measures, including the termination of the meme coin sale and the return of funds to investors. TRUMP was launched on Jan. 17, and its market cap initially surged past $15 billion in under 48 hours before dropping. Concerns over the token’s management have also grown, Many lawmakers and industry figures raised alarms about the possibility of a rug pull, given that the team behind the project holds about 80% of the total supply.
CFTC Shifts Focus Away From Regulation by Enforcement
It will be interesting to see how these cases play out, especially after Caroline Pham, the acting chair of the US Commodity Futures Trading Commission (CFTC), announced that the agency will be moving away from its practice of regulation by enforcement. This kind of shift is expected to greatly impact its approach to crypto firms under the Trump administration.
CFTC announcement
In a statement on Feb. 4, Pham outlined a restructuring of the CFTC’s Division of Enforcement, and shared that the regulator will be more focused on fraud rather than regulatory enforcement against compliant entities. The commission will now divide its responsibilities between two task forces, one targeting retail fraud and violations of the Commodity Exchange Act and the other addressing complex fraud and market manipulation.
Acting enforcement director Brian Young stated that the new structure will allow the commission to focus on securing justice for victims and maintaining confidence in financial markets. The policy shift is one of Pham’s first major decisions since stepping in as acting chair on Jan. 20 after the resignation of Rostin Behnam. It is still unclear whom President Donald Trump will nominate as Behnam’s replacement.
The CFTC’s enforcement track record includes securing more than $17 billion in monetary relief in fiscal year 2024, largely due to its actions against the now-defunct crypto exchange FTX. The agency also pursued enforcement actions against major industry figures like Binance CEO Changpeng Zhao, former Voyager CEO Stephen Ehrlich, and former Celsius CEO Alex Mashinsky.
Pham also announced plans for public roundtable discussions to engage industry leaders on market issues, including digital assets. Meanwhile, reports indicate that the CFTC is currently investigating Super Bowl-related bets offered by Crypto.com and betting platform Kalshi ahead of the championship game on Feb. 9.
