- The LIBRA memecoin scandal, has prompted Pump.fun founder Alon to call for stricter regulations on token launchpads.
- In response, Alon proposed enhanced security measures, user education, and visibility restrictions on suspicious tokens to better protect traders in the memecoin market.
The founder of Solana-based Pump.fun, known pseudonymously as Alon, has called for increased regulation and safeguards for token launchpads in the wake of the LIBRA memecoin scandal. The incident, which involved allegations of an insider scam and a massive market cap wipeout, has reignited concerns over the risks associated with memecoins and their trading platforms.
The ‘Libragate’ Controversy
On February 15, LIBRA was launched and briefly promoted by Argentine President Javier Milei as the official token of Argentina. However, shortly after Milei shared the token, several wallets rapidly extracted over $107 million in liquidity, causing the token’s market cap to plummet by $4.4 billion in just six hours. The abrupt collapse and Milei’s deletion of his endorsement tweet fueled suspicions of an insider-led rug pull, prompting a wave of criticism from the crypto community.
Alon’s Response and Call for Guardrails
In response to the controversy, Alon took to X on February 18 to express his frustration, stating that he was “disgusted” by the events surrounding the LIBRA launch. He defended Pump.fun as a platform designed to protect users from insider-controlled token launches while emphasizing the urgent need for new safeguards.
Alon outlined several measures that could enhance the security and integrity of token launch platforms. His proposals include:
- Educating users on ethical and safe coin creation.
- Improving onboarding processes to make trading more accessible for newcomers.
- Enhancing security measures by reducing the visibility of tokens exhibiting suspicious trading patterns or ownership structures.
He stressed that these changes are necessary to ensure users are protected while also meeting market demands for memecoins.
Meteora’s Involvement and Fallout
The LIBRA debacle has also led to significant internal shake-ups within the crypto space. Ben Chow, co-founder of the decentralized finance (DeFi) project Meteora, resigned from his role following allegations of mismanagement. Meow, co-founder of both Meteora and Jupiter, confirmed the resignation on February 18, citing Chow’s “lack of judgment and care” over key aspects of the project.
Despite widespread speculation, Meow firmly denied that Meteora or Jupiter were involved in insider trading or financial misconduct regarding LIBRA. Chow also denied any wrongdoing, stating that neither he nor the Meteora team had received or managed LIBRA tokens or had access to privileged information about its launch.
Investigations and Future Steps
In light of the LIBRA controversy, Meow announced that Jupiter would be hiring the law firm Fenwick & West to conduct an independent investigation into the matter. The firm, which is currently facing legal action over its alleged role in FTX’s financial scandal, is expected to provide transparency into the LIBRA situation and restore trust within the crypto community.
The ‘Libragate’ incident has underscored the vulnerabilities in the memecoin market and the need for stricter safeguards. Alon’s call for regulatory improvements highlights the ongoing debate over how to balance innovation with security in the rapidly evolving crypto space. As investigations unfold, the industry will be watching closely to see whether stronger protections are implemented to prevent similar scandals in the future.