The Rise and Fall of Pump.fun: From Innovative Star to Crisis of Confidence

In July 2025, Pump.fun, a star platform that once disrupted 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 in the 2000s, is not only experiencing commercial pressure from market share erosion and a significant decline in key data but is also deeply mired in legal troubles with allegations of securities fraud and even RICO felony charges in the United States. The story of Pump.fun began with fervor and is now undergoing the trials brought on by that fervor.

Crisis of Confidence outbreak

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. Ironically, the platform's founder had previously gained credibility with the declaration, "Every presale is a scam," but is now launching a large-scale presale for PUMP, which the community views as blatant hypocrisy and betrayal.

Market concerns quickly materialized. According to data platforms, the price plummeted by 75% within hours of the token's launch. As of the time of writing, PUMP has fallen to 0.0024 USDT, down more than 30% from the public sale price of 0.004 USDT. The underlying data is even more alarming: 340 large wallets coordinated to sell, controlling over 60% of the presale share. According to on-chain data analysis from a user, only two wallets related to private placement rounds sold tokens worth 141 million USD, making a profit of nearly 40 million USD.

On social media, the atmosphere shifted from revelry to despair. "We thought this was an opportunity to change our fate, but it turned out to be just fuel for their luxury yacht parties." This feeling of being deceived and harvested quickly spread, severely damaging the community foundation on which Pump.fun relies.

Market Share Plummets

The loss of trust is directly reflected in the dismal market data. Competitors are eroding its market position at an astonishing rate. According to data analysis platforms, in just one month, Pump.fun's market share in the new coin issuance market plummeted from 90% to 24%, while its main competitor surged from 5% to 64%. Behind this is a battle of two completely different business philosophies.

The model of Pump.fun is centralized pumping, while the success of its competitors lies in using a large portion of platform revenue for repurchasing and destroying ecosystem tokens, thereby building a strong value and trust flywheel through substantial profit sharing.

Faced with difficulties, the team announced a large-scale buyback of tens of millions of dollars, yet was ridiculed by the market as "using retail investors' money to buy back at a high price." Analysts pointed out that the project sold at $0.004 and then used platform income to buy back at $0.0064, essentially paying a 60% premium for market value management. Although this move temporarily boosted the coin price, it could not restore the severely damaged value foundation and market confidence.

Regulatory Pressure and Legal Risks

At the same time, the global regulatory network is tightening. In December 2024, after receiving a warning from the UK financial regulator, Pump.fun was forced to block UK users who accounted for 9% of its traffic. This is not an isolated incident but a regulatory scrutiny that is inevitably brought about by its "viral" growth model.

More serious challenges come from the legal level. Initially, multiple class action lawsuits accused all Meme coins on the platform of being unregistered securities. A law firm proposed the "common issuer" theory, arguing that the platform was deeply involved in the creation, trading, and liquidity processes of the tokens, and was not a neutral technology provider.

In July 2025, the legal battle escalated dramatically. The revised documents of a certain case show that the plaintiffs have added charges based on the Racketeer Influenced and Corrupt Organizations Act (RICO) — a law typically used to combat organized crime. The scope of the defendants has also expanded, with the foundations, laboratories, and even co-founders of the underlying public blockchain being listed as the "architects, beneficiaries, and accomplices" of the fraud.

The impact of this move far exceeds the project itself, as it directly questions the boundaries of responsibility within the entire ecosystem. As underlying infrastructure, do public chains have an obligation to review or supervise the star projects within their ecosystem? This lawsuit has made all public chain platforms realize that their relationship with ecological projects may be far more dangerous than they had imagined.

The foundational actions for the RICO charges include telecommunications and securities fraud, unlicensed money transmission, and aiding money laundering. The most explosive allegation is that a national hacker organization used Pump.fun to issue Meme coins to launder funds stolen during a hack attack on a certain exchange platform.

Internal Governance Defects Exposed

However, the most shocking thing may be the betrayal from within. On May 16, 2024, the platform was attacked, and approximately $1.9 million in funds was stolen. The attacker was not an external hacker, but a resentful former employee.

The former employee, using the pseudonym "Stacc", publicly admitted responsibility on social media, with motives pointing to personal revenge and disdain for "terrible bosses". Technical analysis indicates that the attack stemmed from the abuse of administrative privileges rather than a vulnerability in the smart contract. The employee exploited their privileged position to illegally obtain withdrawal authorization, then rapidly bought up the supply of multiple tokens through flash loans, ultimately intercepting the initial liquidity that was supposed to enter the decentralized exchange.

While publicly claiming to address the risk of Meme coin exit scams, its internal "backdoor" has already been wide open for disgruntled employees. This incident serves as a mirror, reflecting the astonishing neglect of internal security and corporate governance at Pump.fun amidst its rapid growth.

From Solving Problems to Becoming the Problem

The story of Pump.fun began in early 2024 with the global "Meme Coin Frenzy of a certain public chain". Countless developers and speculators flooded into the ecosystem, eager to create or capture the next hundredfold coin. However, the process of creating tokens and providing initial liquidity pools is both expensive and complex, often requiring thousands of dollars in costs and expertise, which keeps countless creative and "grassroots" players out.

Three founders born after 2000 keenly captured this core pain point, claiming to solve the risk of Meme coins running away, with the vision of creating the most interesting place on the Internet. Pump.fun emerged in January 2024, and its core innovation "one-click token issuance" simplifies the originally complex process to just a few clicks, costing only a few dollars. This disruptive innovation has brought explosive growth.

But this talent quickly turned into a speculative tool. The entire business model amplified speculative sentiment. The $4 billion valuation presale of the PUMP token pushed this speculation to its peak.

Disregard for commercial rules runs throughout. They once earned trust with an anti-pre-sale stance but then initiated a large-scale pre-sale. When faced with regulation, they chose to sever ties with the UK operating entity. The CEO denied that Pump.fun is a UK company, while the COO argued that an employment relationship does not imply ownership. To the public, all of this seems calculated rather than ignorant.

Technical genius, speculator, rule-breaker, this complex portrait presents the complete trajectory of Pump.fun's rocket-like rise and rapid fall. The young founders did not anticipate that this project, intended to bring fun, would push them into a complex whirlpool of legal and business issues.

Standing at a Crossroads

Pump.fun is at a crossroads. Ongoing litigation, declining market share, and damaged user trust have put it in a difficult position. This seems to be another brutal reenactment of "Darwinism in Decentralized Finance": a species rapidly thrives due to its unique adaptability (low barriers to entry, high dissemination), but ultimately faces challenges because it cannot evolve the ability to cope with a complex environment (regulation, trust, security).

For the entire cryptocurrency industry, the predicament of Pump.fun raises a serious question: to what extent should platforms be held accountable for the actions within their ecosystem when innovation walks the fine line of legality?

As regulatory scrutiny shifts from centralized exchanges to more complex decentralized finance applications, the next Pump.fun may be brewing. For every surfer, the ability to distinguish between fun and traps has never been more important than it is today. This story of rising from the grassroots to the peak and then falling from the peak may be laying the groundwork for the next chapter in the crypto world.