Federal Judge Clears Solana Labs and Foundation from Burwick Law's Class-Action Lawsuit

Judge Colleen McMahon of the Southern District of New York dismissed all claims against Solana Labs, the Solana Foundation, and five named executives from the Burwick Law class-action lawsuit on August 31, 2026. The ruling ends more than eighteen months of litigation exposure for two of the most prominent institutional entities of the Solana SOL$99.98-3.4% Solana network, whose presence in the case rested on the theory that they had enabled or benefited from conduct originating on a separately operated application.

The case, filed in January 2025 under docket number 25-cv-880, originally targeted Baton Corporation, the parent company behind the memecoin launchpad Pump.fun, alongside three of its founders. Solana Labs and the Foundation were named on a theory of network-level responsibility. The August 31 order cuts that theory at its root.

Why the Howey Test Dismissed the Securities Claims Against Solana Labs

The Securities Act allegations centered on two memecoins, FRED and GRIFFAIN, traded on Pump.fun. Plaintiffs argued those tokens constituted investment contracts under the Howey Test, which requires, among other criteria, a "common enterprise" between investors and promoters.

The court found that requirement unmet on both horizontal and vertical grounds. On horizontal commonality, Judge McMahon held that pooling SOL in a token-specific bonding curve is not sufficient on its own to establish the shared-fortunes structure that prong requires. The court also rejected the characterization advanced by the plaintiffs as self-defeating: insiders buying early, driving the price, and exiting before collapse represents, in the words of the ruling, "the opposite of the shared fortunes a common venture requires."

Vertical commonality also failed. Per the ruling, Baton collected a one-percent fee on every transaction regardless of whether the trader profited, placing it outside the investment-manager classification the prong requires.

The ruling has limited reach. Crypto attorney Ariel Givner, in commentary via Protos, noted the decision does not establish a general principle that memecoins fall outside securities law; the holding applies only when a token lacks a shared profit goal among its participants.

Unjust enrichment claims and RICO allegations brought specifically by plaintiff Diego Aguilar against the Solana entities were also dismissed.

What Survives: RICO Charges Against Baton Corporation and Three Founders

The case continues against Baton Corporation and three of its founders: Alon Cohen (CEO), Dylan Kerler (CTO), and Noah Tweedale (Chief Product Officer). Plaintiffs Kendall Carnahan and Michael Okafor have surviving RICO racketeering claims.

The allegations include wire fraud predicates grounded in public statements by Alon Cohen, money transmission violations under 18 U.S.C. Section 1960 based on alleged platform operation without FinCEN registration, and claims for execution losses and transaction fees. Trading-loss claims were dismissed for failure to establish proximate causation, but the narrower execution and fee claims cleared that bar.

CryptoTimes reported retail losses across the platform have been estimated at 4 to 5.5 billion dollars.

KOL Defendants Face a September 10 Filing Deadline

The lawsuit also names 25 unserved key opinion leaders as defendants, per Protos. Judge McMahon has ordered Burwick Law to file by September 10, 2026, explaining why those promoter-liability claims should not also be dismissed. The handling of KOL defendants by Burwick Law has already generated friction, with crypto influencer "Scooter" publicly threatening a defamation claim against the firm.

After the McMahon Order: Network Entities, Precedent, and What Remains

Solana Labs and the Solana Foundation exit the case with no surviving claims and no admitted wrongdoing. Five named executives, Anatoly Yakovenko, Raj Gokal, Dan Albert, Austin Federa, and Lily Liu, were dismissed in full alongside the two organizations.

Jito JTO$0.431-1.9% Jito Labs, which Burwick Law added as a defendant after the original filing, had already secured a voluntary dismissal from the suit in September 2025. The August 31 order substantially narrows the scope of the case: of the major network-layer entities originally implicated, none remain.

The reasoning on the common enterprise prong carries the most weight beyond this case. By holding that the structure of short-cycle speculative trading, insider accumulation, price inflation, and rapid exit is structurally incompatible with the "shared fortune" Howey requires, the court closes off a line of argument that plaintiffs in similar cases have relied on. The ruling is not a categorical exemption for memecoins; it holds only that these two tokens, on these specific facts, did not constitute securities.

For Solana Labs and the Solana Foundation, the practical effect is clean: they are out of a case that, at its broadest, sought to hold network entities accountable for application-layer conduct. Courts deciding comparable claims will now have this decision as a reference point for where the line sits.