Law Firm Sees Surge In Memecoin Cases Amid Rising Losses

According to Blockworks, Max Burwick, who has been running a boutique law firm focused on cryptocurrency since 2021, has reported a significant increase in cases from clients who have lost money on memecoins. Burwick, speaking from his office in midtown Manhattan, noted that complaints about memecoins have surged over the past three months, with a notable spike in recent weeks. He anticipates this trend will continue to grow, suggesting a dramatic increase in such cases in the future. Speculative investments leading to financial losses and subsequent lawsuits are a recurring theme in every crypto market cycle. This cycle's iteration appears to be driven by memecoins, particularly those launched on the token launchpad pump.fun. The platform has generated at least $1 million in revenue daily over the past five days. Pump.fun aims to prevent rug pulls, a type of scam where project creators disappear with raised funds, leaving tokens or NFTs worthless. The platform's launches avoid pre-sales or team allocations that could mislead investors, promoting a fairer investment environment. However, Burwick warns that even B-list celebrities should exercise caution when launching memecoins. He remains optimistic about recovering assets in some pending cases, citing the clear application of the Howey test to at least half of the memecoins issued. The Howey test is used by courts to determine if tokens qualify as securities, which could place issuers and promoters in legal jeopardy. The test considers whether there is an investment of money with the expectation of profit from a common enterprise dependent on the efforts of others. This aspect is contentious in the crypto community, given the decentralized nature of blockchains. However, Burwick believes the involvement of celebrities could influence court interpretations, referencing an ongoing lawsuit against Shaquille O'Neal, accused of being a statutory seller for a failed NFT project. Burwick suggests that the current memecoin landscape is unprecedented, and how courts will respond remains uncertain. He points to court actions related to NFTs as potential indicators of future legal interpretations. In his view, these cases have provided a framework for how courts might approach similar issues in the memecoin space.