Author: Yohan Yun, CoinTelegraph; Translated by: Bai Shui, Jinse Finance
Pump.Fun's live streaming feature seems to have turned into a platform for developers to showcase extreme shocking content to promote their tokens—legal experts say this could lead to civil or criminal lawsuits.
Developers who break boundaries, from suicide threats to animal abuse to pornographic content, face almost no consequences aside from content removal. Meanwhile, industry participants urge Pump.fun to stop live streaming (which it did earlier today) until it can properly regulate content.
Calls for Pump.fun to shut down its live streaming feature. Source: Beau
Pump.fun is one of the success stories this year, offering no-code token issuance services with just a few clicks, playing a significant role among Solana's memecoin superstars.
Despite being the origin of multiple scam tokens and schemes, the platform remains unregulated. However, its latest series of provocations during live broadcasts is prompting market observers to call for regulatory action.
Yuriy Brisov, partner at Digital and Analogue Partners, pointed out: "This is a legitimate reason for criminal investigations and civil lawsuits."
Alon said: "While we strongly support freedom of speech, we have a responsibility to ensure that users do not see offensive/dangerous content and do not provide a platform for bad actors to act freely."
Pump.fun and the responsibility of content platforms
The latest issues with Pump.fun's live streaming have reignited an ongoing debate about whether channels that distribute user-generated content, like X or YouTube, should be held responsible for the content shared on their platforms.
On social media, despite advancements in content moderation technology, illegal content often slips through the cracks in the flood of user-generated content.
Recently on Pump.fun, a "developer" threatened to commit suicide by hanging if their token did not reach a certain market cap, while another threatened a goldfish on camera.
Source: DBCrypto
Mikko Ohtamaa, co-founder of the algorithmic trading company Trading Strategy, stated on X that Pump.fun has two choices: either be quickly shut down by police after choosing not to regulate, or ultimately be shut down after regulators take it seriously.
"I advocate for freedom of speech, but these live streams are causing real issues where people are breaking the law during the streams. When mainstream media catches wind of this, it will lead to shutdowns," Ohtamaa said.
Alon admitted on X that Pump.fun's moderation "is not perfect" and added that the NSFW (Not Safe For Work) switch can be turned on to hide extreme videos.
In the U.S., Section 230 of the Communications Decency Act provides some form of immunity for platforms hosting user-generated content.
While platforms are usually protected, they must be responsible when reviewing content. Failure to do so, especially if they intentionally allow harmful content, could lead to legal challenges, such as in the case of Barnes v. Yahoo. In the U.S., courts have found that a platform's promise to remove harmful content, if not fulfilled, may create liability.
Alon stated that Pump.fun has a "huge" moderation team that "works around the clock" while inviting community members to flag unmoderated content or tokens to its support channels.
On November 25, Pump.Fun's live streaming board displayed some pornographic and racially discriminatory content.
In a total of four pages of content, many examples of animal abuse and violent content can be seen, all of which seem to have ultimately been removed.
Pump.fun is a paradise for meme coins, but most have been accused of deceiving users.
The platform's welcome to visitors states that it claims to prevent Rug Pulls, and issuing tokens is not that difficult.
In a recent live stream, a teenager created a token, allegedly threw it to his investors to gain $30,000, and then raised his middle fingers to the audience during the stream.
Teenagers are suspected of live Rug Pulls. Source: TikTok Investors
Some pornographic live streams have been accused of playing videos recorded by adult content creators on other platforms, using those as clickbait just to attract investors.
According to Dune Analytics, over 3.8 million tokens have been issued through Pump.
The success rate of these tokens is very low, estimated at only 1.2% of tokens successfully reaching the $69,000 market cap required to list on decentralized exchanges like Raydium.
This may be attributed to several factors, such as token oversaturation and poor marketing, as well as scams and fraud.
Mads Eberhardt, a senior crypto analyst at Steno Research, noted: "This is not a good sign for the industry. I believe the snowball effect of more institutions adopting Bitcoin is unstoppable, but the situation for the Bitcoin industry would be better if this did not happen simultaneously."
Brisov from Digital and Analog Partners stated that existing laws cover fraudulent activities involving cryptocurrencies. In the case of Pump.fun, token creators could be held liable for telecommunications fraud, which is a form of white-collar crime that occurs via electronic means, including the internet.
The threats to Pump.fun come not only from the U.S. Department of Justice.
Brisov said, "For reasons I cannot understand, entrepreneurs dealing with meme coins believe the law does not apply to them."
"If you are engaging in shuffle trading, if you are cheating on Pump.fun, the same laws will apply to you, the [U.S.] Department of Justice will come for you, and you will be prosecuted and imprisoned for many years," he warned.
Unlike many other sites, Pump.fun does not prominently display terms and conditions or disclaimers on its website. If any formal investigation or litigation is initiated against the platform, their absence could be used against them.
Brisov stated that the Department of Justice is not the only agency Pump.fun should be concerned about.
"Any token has the potential to be considered a security, which means there is a high risk of unregistered securities issuance that also violates (securities laws) and relevant EU regulations," he said.
