Pump.fun lawsuit controversy escalates: Founder’s private message reveals acknowledgment of user losses, can platform reforms resolve the trust crisis

Pump.fun’s troubles are growing increasingly serious. A law firm representing retail investors has filed a revised lawsuit against it, adding 5,000 private messages from founders as evidence. Among them, a statement from co-founder Alon Cohen has become a focal point—he candidly admitted in private messages that most investors on the platform are losing money and acknowledged that the platform’s mechanism is essentially like gambling. Meanwhile, Pump.fun is launching a creator fee sharing reform, attempting to improve the ecosystem by adjusting incentive mechanisms. The convergence of these two events makes it difficult to determine whether the lawsuit is exaggerating or if the platform is truly making cuts on its issues.

Evidence in Lawsuit Upgraded: What Did the Founder Say in Private Messages?

According to the latest news, Burwick Law firm has filed a revised lawsuit on behalf of retail investors against Pump.fun, Solana Labs, and related executives. The judge has allowed the plaintiffs to submit a second amended complaint and has accepted 5,000 private messages as new evidence.

Among these exposed private messages, Alon Cohen’s statements are the most impactful. He admitted that most investors on the platform are losing money and described the platform mechanism as follows: “We make it easy for ordinary people to trade small coins with a market cap below $50,000, but this also exposes everyone to extremely low chances of winning, just like gambling.”

This statement is critical. The founder did not deny the phenomenon of losses but instead proactively acknowledged this reality and used “gambling” as an analogy. The lawsuit also accuses some crypto KOLs of paid promotion of meme coins without disclosing interests and of gaining early knowledge of purchase targets.

However, it is worth noting that, according to recent reports, most of the evidence in the lawsuit is based on hearsay, lacking direct empirical proof of Pump.fun executives profiting. Some analysts have expressed reservations about the accusations of “criminal organization.” This means that although evidence is increasing, legal determination remains challenging.

Systemic Dilemma in the Meme Coin Market

Alon Cohen’s phrase “like gambling” hits the core pain point of the entire Meme coin ecosystem.

Market data shows that over 99% of coins on Pump.fun are unable to graduate. Even more extreme, historical data indicates that up to 98% of coins have rug pulls or fraud signs. Although there was a slight rebound in 2026, the overall ecosystem problem has not been fundamentally improved.

The reasons for this situation are multifaceted:

• Extreme scarcity of attention: Thousands of new coins flood platforms like X, Telegram, and Discord daily, overwhelming users.
• Highly dispersed funds: The amount of money available at any given time is limited; new coins struggle to attract sufficient funding quickly.
• Severe homogeneity: Most new coins are variants of memes like “dog/cat/frog/Trump,” lacking differentiation.
• Tools becoming more sophisticated are less friendly to ordinary users: Advanced sniper tools and on-chain data analysis enable faster front-running, compressing early profit windows to seconds, leaving little chance for average investors.

In other words, this is not just Pump.fun’s problem but a zero-sum game logic across the entire Meme coin market. When everyone holds a sell button, ready to backstab their teammates at any moment, “community” and “trust” have long been reduced to dust.

Platform Reform Response: What Can Fee Sharing Change?

Facing lawsuit pressure and market skepticism, Pump.fun announced a creator fee sharing reform after earning $74.1 million in Q4 2025.

According to the latest updates, the platform has introduced measures including:

• Supporting fee sharing with up to 10 wallets
• Supporting transfer of token ownership
• Supporting revoking update permissions
• Planning to launch a market-driven fee decision mechanism, allowing traders to decide whether a token’s narrative is worth supporting with creator fees

The logic behind these reforms is: Co-founder Alon Cohen explicitly states that traders are the lifeblood of the platform, and incentives deviating from them would harm market health. Therefore, the reform shifts focus from incentivizing token creators to incentivizing traders.

But can this solve the fundamental problem? Some are skeptical. The root issue does not lie in the fee distribution mechanism but in the very “house of cards” nature of the Meme coin market—most coins are doomed to fail from inception. No matter how fees are allocated, the reality that 99% of users lose money will not change.

Summary

The escalation of this lawsuit exposes an awkward truth about Pump.fun and the entire Meme coin ecosystem: platform founders are actually well aware that users are losing money, yet the platform’s business model is built on these losses. The founder’s private messages, to some extent, are both an acknowledgment of their own issues and a description of market reality.

The platform’s fee sharing reform seems more like an attempt to improve ecosystem health by adjusting incentives, but it may only address surface issues. The real problem is that in a market where 99% of coins will fail, no mechanism design can change the fate of widespread participant losses.

For investors, Alon Cohen’s statement “like gambling” might be the most honest words this platform has spoken.