Solana’s platform, Pump.fun [PUMP] enabled creators to create, deploy, and launch memecoins.
The number of daily memecoin creations jumped to 71k, with 14 million tokens launched, while the number of created addresses surged to 48k, at press time.
Although the platform created a suitable environment for token creation, it faced criticism as most of these tokens crashed.
Now, these long-term criticisms and concerns have found their way into a courtroom, as retailers filed a lawsuit against Pump.fun.
Judge approves an expanded lawsuit against Pump.fun
According to Justia, a federal court approved an expanded class-action lawsuit against PUMP, Solana Labs, and related projects.
The lawsuit cited liquidity and crypto market imbalances. The case accused the network of enabling insider advantages in memecoin trading.
As such, insiders bought tokens at low prices before public trading, driving prices up through the bonding curve. The approach left retail buyers to absorb losses as insiders dumped these tokens.
The team is accused of creating a system that drove 98.6% of more than 14 million memecoins to collapse to zero, resulting in trader losses estimated between $4 and $5.5 billion.
Internal chats revealed coordination with Solana Labs on early token purchases, leading to RICO allegations. Even more troubling, the token PUMP was launched and later shut down, with the top 10 holders controlling 70% of its supply.
PUMP plummeted 80% amid legal woes
The ongoing legal battle heavily impacted PUMP. At press time, PUMP plummeted 14% to a low of $0.0018 on daily charts and 80% from its all-time high of $0.009.
Over the same period, its market cap dropped to a low of $644 million, reflecting steady capital outflows. In fact, investors, and traders across the spot and futures markets panicked and pulled out capital, fearing more losses.
According to CoinGlass data, Exchange inflows surged to $24 million compared to $22.9 million in outflows. As a result, Spot Netflow jumped 144.88% to $1.09 million, a clear sign of aggressive spot selling.
On the futures side, sellers too dominated, as PUMP recorded $142.91 million in Outflows compared to $139.7 million in Inflows.
For that reason, Futures Netflow dropped to -$3.21 million, indicating higher contract sales than buyers.
These capital flows showed that investors exited the market, leading to the recent price crash.
More losses ahead?
PUMP faced massive downward pressure as investors across spot and futures panicked and dumped over Pump.fun’s legal woes.
As a result, the altcoin’s Relative Strength Index (RSI) plunged into the oversold zone and settled at 28 at press time. Likewise, its Directional Movement Index (DMI) dipped to 11, indicating strong downward momentum.
When these indicators fall to such low levels, they signal potential for trend continuation. Thus, if sellers continue to offload, PUMP could drop to a new all-time low.
For a meaningful trend reversal, PUMP must first reclaim $0.0025 to rebuild buyers’ confidence.
Final Thoughts
- A judge approved an expanded lawsuit against Pump.fun over allegations of insider trading.
- PUMP dropped 80% from $0.009 to a record low of $0.0018.
