Meme coin platform Pump.fun faces a Crisis of Confidence and legal challenges

In July 2025, the star platform Pump.fun, which caused a sensation in the Meme track with its "one-click coin issuance" model, is facing an unprecedented Crisis of Confidence and market challenges. This platform, created by three founders born after 2000, is not only having its market share rapidly eaten away by competitors and experiencing a significant decline in key data, but is also deeply mired in legal troubles involving allegations of securities fraud and even RICO felonies.

Crisis of Confidence Explodes

In July 2025, 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, but it became a turning point that shook the community's trust. The platform had previously gained credibility by opposing pre-sales, but now it launched a large-scale pre-sale for PUMP, which was seen as a betrayal by the community.

A well-known venture capital founder publicly stated that this is a high-risk "liquidity exit event," believing that raising funds at a $4 billion valuation during a down cycle for altcoins has severely overdrawn the future. Market concerns quickly materialized, with the price plummeting 75% within hours of the token's launch. As of the time of writing, PUMP has fallen over 30% from its public sale price.

On-chain data shows that 340 large wallets are coordinating to sell off, controlling over 60% of the presale share. Only two private placement-related wallets have sold tokens worth $141 million, making a profit of nearly $40 million. On social media, user sentiment has shifted from euphoria to despair, severely damaging the community foundation of the platform.

Significant decline in market share

The Crisis of Confidence is directly reflected in market data. According to data from the platform, within just one month, Pump.fun's market share in the new coin issuance market plummeted from 90% to 24%, while competitors surged from 5% to 64%. Behind this is a battle of two different business models: Pump.fun adopts centralized pumping, while competitors use most of the platform's revenue for repurchase and destruction of ecological coins, building a strong value and trust flywheel.

In the face of difficulties, the Pump.fun team announced the use of tens of millions of dollars for a large-scale buyback, yet the market ridiculed it as "using retail investors' money to buy back at a high price." Analysis pointed out that the project side sold at $0.004 and then used platform revenue to buy back at $0.0064, which essentially means paying a 60% premium for market value management.

At the same time, the global regulatory network is tightening. In December 2024, Pump.fun was forced to block UK users who accounted for 9% of its traffic, marking the regulatory scrutiny that its "viral" growth model inevitably attracted.

Legal Challenges Escalate

More severe challenges come from the legal aspect. Initially, multiple class action lawsuits accused all Meme coins on the platform of being unregistered securities. In July 2025, the legal battle escalated sharply, with plaintiffs adding accusations based on the Racketeer Influenced and Corrupt Organizations Act (RICO). The scope of defendants also expanded to include major participants in the entire ecosystem.

The underlying activities of the RICO charges include telecom and securities fraud, unlicensed money transmission, and assisting with money laundering. The most explosive allegation is that a national-level hacking organization used Pump.fun to issue meme coins to launder funds stolen during a hacking attack on a certain exchange.

Internal Governance Flaws Exposed

In May 2024, the platform suffered an internal attack, resulting in approximately $1.9 million in funds being stolen. The attacker was a former employee, motivated by personal revenge. This incident exposed Pump.fun's serious neglect of internal security and corporate governance during its rapid development.

From Solving Problems to Becoming a Problem

Pump.fun originated from the Solana Meme coin craze in early 2024. Three young founders keenly identified the high barrier to entry for creating tokens and launched a "one-click token creation" solution. However, this innovation quickly evolved into a speculative tool, with the PUMP token's $4 billion valuation pre-sale pushing this speculation to its peak.

The disregard for business rules runs throughout. From a stance against pre-sales to initiating large-scale pre-sales, choosing to sever ties with the operating entity when facing regulation, these actions appear to the public as more calculated than ignorant.

Future Trends

Pump.fun is currently facing multiple challenges, including lawsuits, a decline in market share, and a Crisis of Confidence among users. This turmoil is not only about the rise and fall of a single project, but also sparks deep reflection on the entire crypto industry: how to balance innovation and regulation? What are the boundaries of the platform's responsibility for actions within the ecosystem?

For industry participants, while enjoying the opportunities brought by innovation, they must also be vigilant about potential risks. The story of Pump.fun may provide important insights for the future development of the crypto world.