Author: Yohan Yun, CoinTelegraph; Translated by: Bai Shui, Golden Finance
The live streaming feature of Pump.Fun seems to have transformed into a platform for developers to showcase extreme shock content to promote their tokens—according to legal experts, this could lead to civil or criminal lawsuits.
Developers breaking boundaries face little consequence beyond content removal for issues ranging from suicide threats and animal abuse to pornographic content. Meanwhile, industry participants urged 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 features. 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.
Although the platform is the source of multiple scam tokens and schemes, it remains unregulated. However, the latest series of provocative actions in its live streams is prompting market observers to call for regulatory action.
Yuriy Brisov, a partner at Digital and Analogue Partners, noted: "This is a valid reason for a criminal investigation and civil litigation."
Alon said: "While we strongly support free speech, we have a responsibility to ensure users do not see offensive/dangerous content and do not provide a platform for bad actors to do as they please."
Responsibilities of Pump.fun and content platforms
The latest issues of Pump.fun regarding live streaming have reignited an ongoing debate about whether channels distributing user-generated content, like X or YouTube, should be 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 hang himself if their token did not reach a certain market value, while another person threatened a goldfish on camera.
Source: DBCrypto
Mikko Ohtamaa, co-founder of algorithmic trading firm Trading Strategy, stated on X that Pump.fun has two options: either be quickly shut down by the police after choosing not to regulate, or ultimately be shut down after regulators take it seriously.
"I advocate for free speech, but these live streams are causing real problems, and people are breaking the law during the broadcasts. When mainstream media catches wind of this, it will lead to shutdowns," Ohtamaa said.
Alon admitted on X that Pump.fun's review process is "not perfect" and added that a NSFW (Not Safe For Work) switch can be turned on to hide extreme videos.
In the United States, Section 230 of the Communications Decency Act provides some form of immunity for platforms hosting user-generated content.
While platforms are generally protected, they must be responsible when moderating content. Failure to do so, especially if they deliberately allow harmful content, could lead to legal challenges. For example, in the Barnes v. Yahoo case. In the U.S., courts have determined that a platform's commitment to removing harmful content, if unfulfilled, could result in liability.
Alon stated that Pump.fun has a 'large' review team that works 'day and night', while also inviting community members to flag unverified content or tokens to its support channels.
On November 25, the Pump.Fun live stream board displayed some pornographic and racially discriminatory content.
Among a total of four pages of content, numerous examples of animal abuse and violent content can be seen, which seemingly have all been removed.
Pump.fun is a haven for meme coins, but most are accused of deceiving users.
The platform's welcoming statement claims it can prevent Rug Pulls, and issuing tokens is not that difficult.
In a recent live stream, a teenager created a token and allegedly threw it to his investors to gain $30,000, then raised two middle fingers to the audience during the broadcast.
Teenager suspected of live Rug Pull. Source: TikTokInvestors
Some pornographic live streams are accused of playing videos recorded by adult content creators on other platforms, which are used 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 required market value of $69,000 to be listed on decentralized exchanges like Raydium.
This could 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, pointed out: "This is not a good sign for the industry. I believe the snowball effect of more and 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 fraud involving cryptocurrencies. In the case of Pump.fun, token creators could be held liable for telecommunications fraud, a type of white-collar crime occurring through electronic means, including the internet.
The threats to Pump.fun are not limited to the U.S. Department of Justice
Brisov said: "For reasons I cannot understand, entrepreneurs dealing with meme coins think the law does not apply to them."
"If you are doing wash 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 years," he warned.
Unlike many other websites, Pump.fun does not prominently display terms and conditions or disclaimers on its site. If any formal investigation or lawsuit is initiated against the platform, their absence could be used against it.
Brisov stated that the Department of Justice is not the only agency Pump.fun should be worried about.
"Any token could potentially be viewed as a security, which means there is a high risk of issuing unregistered securities, violating (securities laws) and relevant EU regulations," he said.