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Crypto Law/Level V · Builders and launchers/5.1 Launching a token/Lesson 4

Launchpads and bonding curves

How automated launch platforms price and sell new tokens, and what the first major US ruling against one, in the Pump.fun class action, has and has not decided.

Education, not legal, tax or investment advice. Crypto law differs between countries and states and changes often. Check the current rules where you live with a qualified lawyer or tax adviser before you act.

The lean path

The cheapest, lowest-tax, simplest and most private route the law allows, best first. Each step names the rule it rests on and the condition that keeps it lawful.

  1. As a creator, launching on an existing bonding-curve launchpad with no presale avoids building custody or a fundraise. Aguilar (S.D.N.Y. 2026) found no common enterprise, but only at the pleading stage, and your own promises still count.
  2. Avoid operating a launchpad yourself. Aguilar let a §1960 unlicensed money-transmission claim proceed against the operator, which collected a fee while its curve contracts converted one form of value into another.
  3. If you do operate one, registering as an MSB with FinCEN (Form 107) is free and due within 180 days, but state money-transmitter licences and an AML programme follow, and those are the real cost.
  4. Geoblock UK users rather than pay for FCA-approved promotions, because promoting crypto to UK consumers outside the permitted routes has been a crime since 8 October 2023; the block must actually work.
  5. Never call the platform ‘fair’ or ‘unruggable’ unless insiders have no earlier access to tokens or addresses; in Aguilar those words supported wire-fraud racketeering claims.

MaterialsThe 31 August 2026 opinion in Aguilar v. Baton Corporation Ltd., No. 1:25-cv-00880 (S.D.N.Y.)18 U.S.C. §1960 on unlicensed money-transmitting businessesThe UK FCA warning-list entry for Pump.fun (3 December 2024)A launchpad’s published fee schedule and terms of use

Wonder

  1. Who is the seller when someone buys on a bonding curve?
  2. Can a launchpad be liable for tokens other people create on it?
  3. Does a launchpad need a licence?

Explore

  1. A launchpad is a platform that lets anyone create a token and start trading it within minutes. Many use a bonding curve: a smart contract that issues new tokens when buyers pay in and destroys them when holders sell back, at a price set by formula rather than by an order book. As the court in Aguilar v. Baton Corporation described Pump.fun, which began operating on Solana in January 2024, the programmed price rises as tokens are bought and falls as they are sold, so the first buyers pay less than later ones, and timing and execution speed matter a great deal.
  2. When enough buying fills a curve, launchpads typically move the token and its accumulated liquidity to a decentralized exchange, a step users call ‘graduation’. The platform earns either way. The Aguilar plaintiffs alleged that Pump.fun charged a 1% fee on every purchase and sale, and that users also paid Solana network fees and extra priority fees for faster execution. For a builder this means a launchpad is not a neutral noticeboard: it sets the price formula, collects fees and influences who sees new tokens first, and each of those choices can become a legal question.
  3. Aguilar is a class action filed in the Southern District of New York on 30 January 2025 and consolidated with Carnahan v. Baton Corporation. It accused the operator, Baton Corporation Ltd., its three co-founders and, later, Solana Labs, the Solana Foundation and others of running a rigged ‘pump and dump’ system. On 31 August 2026 Judge Colleen McMahon granted the motions to dismiss in part. All claims against the Solana defendants were dismissed. Securities Act claims over FRED and GRIFFAIN, the two tokens the named plaintiffs bought, failed on the merits; claims over eighteen other tokens failed because no named plaintiff had bought them.
  4. The reasoning on bonding curves matters for builders. The plaintiffs argued that the SOL held in each token’s curve was the pool that Howey’s common enterprise requires (lesson 3.1.3). The court disagreed: pooled assets are not enough unless the money is put to use in a common undertaking whose success decides buyers’ fortunes, and ‘mere economic interaction among traders’ on one platform is not a common enterprise. Nor did the 1% fee create one, because Baton earned it on every trade whether prices rose or fell. The court also rejected the theory that trading memecoins on the platform was illegal gambling under federal and New York law.
  5. Two other theories survived, at the pleading stage only. The court found it plausible that the curve contracts accepted one form of value and transmitted another for a fee, so that Baton could be an unlicensed money-transmitting business under 18 U.S.C. §1960 for failing to register with FinCEN (lesson 5.2.1). It also held that the CEO’s posts calling Pump.fun an ‘unruggable fair launch platform’ and an ‘even playing field’ could support wire fraud if, as alleged, insiders got early token addresses and the cheapest positions (lesson 5.1.1). Racketeering claims by two plaintiffs against Baton and its co-founders continue. None of the allegations has been proved.
  6. Launchpads also meet regulators abroad. On 3 December 2024 the UK Financial Conduct Authority added Pump.fun to its warning list as a firm that ‘may be providing or promoting financial services or products without our permission’; according to press reports, the platform then blocked UK users. Under UK rules in force since 8 October 2023, communicating a cryptoasset promotion to UK consumers outside the permitted routes is a criminal offence (lesson 5.1.7). A practical check for anyone building on or with a launchpad: write down who sets the curve, who receives each fee, who can see new tokens before the public, and which countries’ users are served.

Key facts

  • Pump.fun, operated by Baton Corporation Ltd., began operating on the Solana blockchain in January 2024.
  • Aguilar v. Baton Corporation Ltd., No. 1:25-cv-00880 (S.D.N.Y.), was filed on 30 January 2025.
  • On 31 August 2026 Judge Colleen McMahon dismissed the Securities Act claims over FRED and GRIFFAIN for failure to plead a common enterprise under Howey.
  • The court held that holding buyers’ SOL in a token-specific bonding-curve contract did not by itself create horizontal commonality.
  • The court found unlicensed money transmission under 18 U.S.C. §1960 plausibly alleged against Baton and its three co-founders at the pleading stage.
  • The UK Financial Conduct Authority published a warning about Pump.fun on 3 December 2024.

Exercise nine, six, three, one

9CollectList up to 9 features of a token launchpad you know or can research (some lists will be shorter), such as its pricing formula, fees, graduation rule, creator rewards, promotion tools and country restrictions.
6ClusterSort them into 6 categories: pricing mechanics, fees the platform keeps, fees paid to others, features that give some users earlier or faster access, marketing claims the platform makes, and geographic or eligibility limits.
3DistillReduce the 6 to 3 groups: features that raise securities questions, features that raise money-transmission or licensing questions, and features that raise fraud or fairness questions.
1CrystallizeWrite 1 sentence naming the launchpad feature on your list that you think creates the most legal exposure for its operator, and the law it touches.

Fact check

Dates, figures and claims checked against the published sources listed below.

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