The crypto industry is pushing the boundaries of what’s possible in finance. Without intermediaries, crypto technologies promote financial inclusivity and make it easy to digitize all kinds of assets. But, of course, the same technologies have fueled asset bubbles and empowered criminals by innovating faster than laws can keep up.
The industry scored a major victory with the election of Donald Trump and other crypto-friendly politicians promising lighter regulations. But a recent project combining livestreams and memecoins shows what kind of chaos might ensue without any guardrails, and that could lead to regulators overcorrecting in ways that hurt the broader industry.
In this article, we’ll look at the Pump Fun debacle and what it might mean for the future of crypto regulations.
Memecoins 101
Memes have been a part of popular crypto culture since Bitcoin’s inception. So, not surprisingly, the concept was financialized using the same technology behind cryptocurrencies. While Dogecoin was the first significant memecoin, millions of others have increased the market over the past decade.
Elon Musk’s promotion of Dogecoin led its market capitalization to grow from less than one cent in 2021 to a high of more than 50 cents. This potential to make mint overnight millionaires has drawn in speculators and made memecoins even more popular. With Trump’s election, Dogecoin soared again from 10 cents to more than 40 cents.
Not surprisingly, memecoins have generated plenty of controversy. Newly launched memecoins have very little liquidity, making it easy to manipulate the price. In some cases, creators holding a bunch of coins get people to buy in and then dump their coins in what’s known as a “rug pull” in the crypto community (or pump-and-dump to outsiders).
Until recently, developing memecoins involved some level of technical know-how and initial investment to cover gas fees. However, platforms like Pump Fun have made it easier than ever for anyone to create their own memecoin at a very low (or no) cost—and that has led to some of the industry’s recent troubles.
What is Pump Fun?
Pump Fun (pump.fun) is a decentralized platform on the Solana blockchain, enabling users to easily create and launch their own memecoins without needing technical skills. After its launch in January 2024, the platform became the fastest-growing crypto app in history by some metrics, reaching over $100 million in revenue with over one million tokens issued.
Some of the most popular tokens launched on the platform include Billy ($BILLY), Michi ($MICHI), and Shark Cat ($SC), which all exceeded $200 million in market capitalization. Celebrities like Iggy Azalea, Andrew Tate, and Jason Derulo have also launched tokens on the platform, helping to build trust among token investors.
Pump.fun makes it easy for anyone to create and promote a memecoin. Source: Pump.fun
In May 2024, the platform added a controversial livestreaming feature, enabling memecoin creators to promote their tokens in livestreams. And since then, the platform has become a hotbed for controversial content—from loads of pornography to a creator dousing themselves in isopropyl alcohol before shooting fireworks at himself.
Even some employees appeared concerned about the feature. Shortly after the launch, an ex-employee introduced an exploit to “kill” the protocol because it “inadvertently hurt people,” saying that if things continue how they are, someone is “going to kill themselves eventually.” Since then, this warning has only garnered more merit.
The Latest Controversy
The Pump Fun livestreaming feature drew fresh controversy in November 2024. During the span of a single weekend, the platform saw, among other things, a man holding a goldfish at gunpoint, a child threatening to murder his family, and someone threatening suicide unless the price of their token moved higher, according to Protos.
While this isn’t the first time Pump Fun has come under pressure, creators are going to even more extraordinary lengths to attract people to their tokens. These antics increasingly involve weapons, threats, and other concerning behaviors, which could eventually lead to someone being severely injured or killed—something that could stir more controversy.
After a shocking few days, a growing chorus of crypto industry veterans and enthusiasts called for more control over the livestream content. Pudgy Penguins’ safety project manager called on the livestream feature to be shut down while a core engineer for Eigen Labs said the platform could screw over the entire industry.
Pump Fun finally capitulated by mid-November and acknowledged recent events on its livestreams have “caused concern” within the community. The platform announced a pause on the functionality “for an indefinite period of time.” But with revenue trending sharply lower, there’s no telling how long the shutdown will last.
Challenges for the Industry
Pump Fun’s controversies come as the broader crypto industry insists it’s overburdened with regulations. In particular, the SEC has regulated the initial coin offering (ICO) market with a heavy hand over the past few years, arguing that token issuers are effectively launching unregistered securities offerings that put investors at risk.
Following the election, SEC Chairman Gary Gensler is expected to step down, and Trump’s new appointee—Paul Atkins—will take on the role. Atkins is a well-known securities lawyer and former SEC Commissioner during the Bush administration. While he’s decidedly pro-crypto, controversies like Pump Fun could make non-regulation untenable.
Pump Fun’s livestream capabilities may be on hold now, but the saga begs the question of what’s too far in the crypto sphere. Without regulation (or now even technical hurdles), anyone can sell tokens to raise money by doing anything. And, if not Pump Fun, it’s easy to see how another platform could replace it with so much money to be made.
As for Pump Fun, the company’s updates tend to come out at random without a whitepaper or roadmap, so it’s hard to tell what’s coming next. With growing competition, the platform is likely to continue to add new features, tweak current features, and push boundaries to remain the top memecoin creator in the market.
The Bottom Line
Memecoins have become a way for creators and investors to speculate. As the hurdle to creating memecoins has fallen, creators have had to go to even greater extremes to attract speculators and make their tokens valuable. And the rise of livestreams has underscored just how far these creators are willing to go—potentially too far.
If left unchecked, these trends could invite more regulation on memecoins. But, as everyone knows, regulators tend to overreact, and broader regulations could be pushed onto all cryptocurrencies—not just memecoins. While the Pump Fun issue is resolved for now, there’s little doubt that these capabilities will resurface elsewhere over time.
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This material has been prepared for informational purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax or other advice specific to your particular situation.
