~/blog/pump-fun-ruling-rico-survives-securities-claims-dismissed
The Pump.fun Ruling: Racketeering Counts Survive in Part, Securities Counts Dismissed
A Manhattan judge split the consolidated Pump.fun class action on 31 August — and the securities half turned on an alleged one-percent fee that never cared whether you won.
Nothing has been proven. On 31 August, Judge Colleen McMahon of the Southern District of New York decided three motions to dismiss in the consolidated Pump.fun class action, splitting it in half — a pleadings ruling, settling what a complaint may say next, not what happened.
Per the opinion and order, the racketeering counts go forward narrowly — they “remain pending only as asserted by Kendall Carnahan and Michael Okafor against Baton Corporation Ltd., Alon Cohen, Dylan Kerler, and Noah Tweedale.” The third plaintiff, Diego Aguilar, did not adequately plead a domestic RICO injury; all claims against Solana Labs, the Solana Foundation and five named individuals were dismissed. The Securities Act counts were “asserted only against the Baton Defendants” — footnote 2 records that the Solana defendants are not named in them — and both are dismissed.
That second half turned on a fee schedule. Plaintiffs argued a common enterprise under Howey: the platform’s fortunes rising and falling with buyers’. The court put Baton on the stockbroker side of that line, on the alleged one percent it takes on every trade — “Baton earned its fee regardless of whether the purchaser ultimately made money,” and could keep earning “while a token’s price was falling.” We read that fee from the other side when a record fee week arrived in August; a court has now made the indifference load-bearing.
This is emphatically not a holding that memecoins are not securities. Only two tokens were before the court, the ones plaintiffs bought: FRED, the First Convicted Raccoon, allegedly promising “222,222× upside,” and GRIFFAIN, allegedly marketed as “AI-driven trading in meme form” with contemplated staking rewards of 300 percent APY. Those two failed on one element. The other eighteen “Pump Tokens” went out because these plaintiffs never bought them, and the two dispositions are better quoted than reconciled: the body grants the count “without prejudice” for lack of class standing; the conclusion says “all dismissals under Rule 12(b)(6) are with prejudice.”
The field note of the week: twenty-five “Lead KOL Doe Defendants” — key opinion leaders, the promoters — have gone unidentified and unserved in the year and a half since the suit began, with no extension of time sought. Plaintiffs must show cause by 10 September why those claims should not be dismissed under Rule 4(m). We read the public docket on 4 September and found nothing entered after 31 August; that is one public mirror of the record, not PACER itself.
Hold the surviving half at arm’s length too. The alleged predicates are wire fraud, illegal gambling and unlicensed money transmission — allegations a plaintiff may now try to prove; this desk asserts nothing about anyone’s licensing anywhere. The $4bn-to-$5.5bn retail loss figure is the plaintiffs’ estimate.
The permanent footnote, in legal phrasing: an allegation is not a verdict, and a dismissed count is not a clean bill of health. These tokens go to zero as their ordinary outcome, and nothing here is financial advice.