New memecoin tokens drop by 50% as UK watchdog bans platform

Pump.fun, a platform that allows users to create and trade memecoins – tokens typically based on internet jokes – without coding skills, has lost more than half its users and tokens following a ban in the UK.

The UK’s Financial Conduct Authority (FCA) warned the public to avoid dealing with memecoins and memecoin platforms on December 6, and the same day pump.fun restricted access to UK users.

Pump.fun’s move, it said in a statement on its website, was made “in accordance with the laws and regulations of the United Kingdom.”

The UK is now classified as a “restricted jurisdiction” on the platform, and UK residents can no longer use pump.fun. The same goes for the 49 other countries that pump.fun has identified as “restricted.”

Pump.fun’s UK user ban isn’t a huge surprise. On Saturday, the FCA had urged the public to avoid pump.fun.

The FCA, which oversees financial services in the UK, said that pump.fun — and by extension the memecoins created on pump.fun — might be “providing or promoting financial services or products without our permission.”

Pump.fun has been embroiled in a series of controversies since its January launch, repeatedly raising ethical and legal concerns.

In May, a user live-streamed self-immolation on the platform to promote their meme coin, prompting pump.fun to integrate live streaming as a feature — a decision that was later reversed after additional scandals.

In October, child sexual abuse material was discovered on the platform, an incident that highlighted lapses in its moderation efforts. Subsequent live-streamed threats to animal life, including a staged chicken beheading and a faked suicide, forced pump.fun to disable its live streaming feature altogether.

Despite these controversies, pump.fun dominated Solana’s on-chain activity in November, accounting for 62% of transactions, according to Dune Analytics data.

Pump.fun’s troubles extend beyond its user base. In May, a disgruntled ex-employee, Jarett Dunn (aka Stacc), drained $2 million from the protocol, claiming his actions were intended to “kill” the platform due to its harmful impact on users. Dunn pleaded guilty in August but is now attempting to withdraw his plea, positioning himself as a whistleblower.

“Where is this company registered and paying taxes?” Dunn questioned on X following the UK user ban.

I didn’t reinstall x yet. Just here for a killer.

Question 1. Where is this company registered and paying taxes? https://t.co/mCkoa87dGX pic.twitter.com/nQifZeg155

— based birdman stacc (@STACCoverflow) December 6, 2024

Pump.fun is registered in the UK as Baton Corporation Ltd., with its core team reportedly based in London — a detail that raises questions about the legal implications of banning UK users while operating as a UK-registered entity.

At the same time, pump.fun is under investigation by the FCA, the US Securities and Exchange Commission, and the US Commodity Futures Trading Commission, according to multiple outlets.

The UK ban is the first public restriction from pump.fun, which has faced calls to implement stronger vetting and moderation measures, after a year of exponential growth. The 500-pound gorilla of the memecoin launch space, pump.fun has ~1.5 million total users and has generated over $283 million in revenue to date.

The move is part of a broader shift in strategy for pump.fun. The platform, which has yet to turn a profit, is planning to introduce more traditional social features and tools for crypto developers in the future, pump.fun pseudonymous founder alon told me in a text last month.

That could be a tough sell given the platform’s established reputation, not to mention the fact that pump.fun is under regulatory fire in a number of major markets, including the US and UK. Indeed, pump.fun may never recover from the reputational damage done, with existing memecoin trading platforms and memecoin teams — many of which have raised funds and plan to reward employees in memecoins — pivoting to other launchpads.

So what comes next for pump.fun? alon, in a leaked internal memo to employees last week, said that pump.fun will “fight on” and that “the most important thing is to keep shipping and executing.”

That said, the reality is that pump.fun — which has seen its valuation plummet from $1.2 billion in April to just $200 million as of a recent funding round — could run out of cash before the regulatory dust settles. The platform, which is reportedly laying off at least 15% of its staff, has enough runway to last until Q2 2025, according to The Information.