As a seasoned analyst with over two decades of experience in tech and finance, I have witnessed the evolution of the digital landscape from the early days of Napster to the current crypto craze. The latest developments at Pump.fun are a stark reminder that while innovation can bring about immense opportunities, it also comes with its fair share of risks and ethical dilemmas.
It appears that the live streaming function on Pump.fun’s Launchpad is being used by some developers to disseminate disturbing or shocking content as a means of marketing their tokens.
Developers who cross ethical lines from making threats about suicide or abusing animals to distributing explicit content have rarely faced significant repercussions beyond having their material taken down. Recently, there has been pressure on Pump.fun to halt its livestreams until they can effectively monitor the content that is being broadcast, a decision which they implemented today.
Among the standout achievements of this year, Pump.fun has significantly contributed to Solana’s meteoric rise as a memecoin sensation. It does so by providing easy-to-use, click-based token launching services without requiring any coding skills.
Although this platform is where many fraudulent tokens originated and rug pulls occurred, it has managed to avoid regulatory oversight so far. Lately, contentious actions during live broadcasts have prompted financial analysts to urge regulators to intervene.
Yuriy Brisov, a partner at Digital and Analogue Partners, explained to CryptoMoon that it’s a valid justification for both criminal investigations and civil lawsuits.
Despite CryptoMoon’s request for comment, neither Pump.fun nor its co-founder Alon have responded. However, they have released a public statement on platform X instead.
While we firmly advocate for freedom of speech and self-expression, it’s crucial for us to filter out offensive or harmful content from our users’ view, and to prevent malicious individuals from misusing our platform. – Alon explained.
Pump.fun and content platform liabilities
The recent troubles with live streams at Pump.fun are sparking renewed discussions about whether platforms hosting user-generated content, such as X or YouTube, ought to bear the responsibility for the content they transmit.
Although social media platforms have made significant strides in content moderation technology, it’s still challenging to catch all illegal content due to the massive amount of user-generated posts that flood these platforms.
As a researcher studying the dynamics of crypto communities, I’ve recently come across some alarming incidents on Pump.fun. In this platform, two individuals have made startling statements that are concerning. One developer has threatened self-harm if their token doesn’t reach a specific market cap, while another has put a goldfish at risk by broadcasting such actions on camera. These behaviors are not only unprofessional but also potentially dangerous and distressing for the community. It is crucial to address these issues promptly to maintain a healthy and safe environment for all participants.
Mikko Ohtamaa, a co-founder of algorithmic trading firm Trading Strategy, stated on X that Pump.fun faces two possible outcomes: either it is swiftly closed by the police due to lack of moderation, or it eventually shuts down years later once regulators fully understand its operations.
Ohtamah argues for free speech, yet these live streams have been causing problems as they encourage law-breaking. If mainstream media becomes aware of this, it could lead to a shutdown.
Alon openly acknowledged on X that the moderation on Pump.fun isn’t flawless, but he also pointed out a feature where users can activate an NSFW toggle to conceal explicit videos.
In the U.S., Section 230 of the Communications Decency Act grants a type of protection to websites or platforms that host content created by their users.
Platforms are usually shielded from certain responsibilities, but they should exercise due care when managing content. Neglecting this duty, particularly if they deliberately permit harmful content, may lead to legal disputes. For example, in the case of Barnes v. Yahoo!, the court concluded that a platform’s pledge to remove dangerous content could impose liability if not kept.
Alon mentioned that Pump.fun’s team of moderators is quite extensive, and they’re active 24/7. He encouraged community members to report any unattended content or issues to the support team whenever they come across them.
On November 25th, the main screen of Pump.fun’s live streaming platform showcased explicit sexual content and racially insensitive material.
As a crypto investor, I came across several disturbing instances of animal cruelty and violent content spread over four webpages. Fortunately, it seemed like these distressing materials were ultimately removed from view.
Pump.fun is a memecoin haven, but most are accused of scamming users
The platform’s welcome note to visitors claims that it prevents rug pulls, but rugging Pump.fun-launched tokens is apparently not that difficult.
During a recent online broadcast, a young individual is said to have developed a digital token, subsequently sold it to investors for approximately $30,000, and then cashed out prior to making an obscene gesture towards the audience by flashing the double middle finger symbol during the livestream.
Certain live streams featuring adult content are under scrutiny for using pre-recorded videos of adult content creators from other platforms, primarily to attract clicks (or views), and subsequently deceiving investors.
Based on information from Dune Analytics, approximately 3.8 million tokens have been released via the Pump.fun platform since it started operating in January.
A significant number of these tokens struggle to meet the mark, as only about 1.2% of them are projected to reach a market cap of $69,000 needed for listing on platforms such as Raydium.
Several possible reasons might account for this situation, including token overcrowding, ineffective marketing efforts, fraudulent activities like scams, and instances of projects abruptly ending, known as “rug pulls”.
Mads Eberhardt, a top crypto analyst at Steno Research, shared with CryptoMoon that this trend isn’t beneficial for the industry. He thinks that while there is an unstoppable surge in institutional adoption, he wishes the industry could be stronger if these events weren’t happening all at once.
As per Digital and Analogue Partners’ Brisov, current laws provide coverage for deceitful activities related to cryptocurrencies. In the instance of Pump.fun, the creators of the tokens may face charges for wire fraud, a type of financial crime that transpires through electronic means such as the internet.
Memecoins are still coins
According to Brisov, it seems puzzling to him why some entrepreneurs involved in memecoins believe that legal regulations don’t pertain to their operations.
“Engaging in wash trading or rug pulling on Pump.fun carries the same consequences. You can expect a visit from the U.S Department of Justice, and if found guilty, you may face prosecution and spend several years behind bars.
On Pump.fun’s website, you won’t find prominent terms and conditions or disclaimers like some other platforms do. This lack of visibility might be problematic should there be any formal inquiries or legal disputes involving the platform, as such documents could potentially be used as evidence against it.
The Department of Justice is not the only agency that Pump.fun should be worried about, according to Brisov.
He stated that any item could be considered a security, thus increasing the possibility of undeclared security sales, which is not only illegal under U.S. Securities Act but also goes against EU regulations.
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2024-11-26 01:01