Memecoins Are Not Securities — A Federal Judge Just Said So, and the Crypto Industry Is Taking Notes

In May 2024, Caitlyn Jenner launched a memecoin called JENNER on Solana's pump.fun platform. The coin pumped before dumping, resulting in significant losses for some crypto investors. One of these investors, British citizen Lee Greenfield, lost more than $40,000 and led a class action lawsuit against Caitlyn Jenner, claiming that JENNER should be classified as an unregistered security. On April 16, 2026, U.S. District Judge Stanley Blumenfeld Jr. of the Central District of California dismissed the entire lawsuit in its entirety, including all federal securities claims. This means that the federal securities counsel cannot bring these claims again. The case is over, at least in U.S. federal court.

The ruling will have an impact well beyond the name of Jenner. The opinion of the judge in the ruling will affect every celebrity memecoin, every influencer launched tokens, and every investor trying to determine whether the law provides them with protection against a collapse of one of these tokens.

What the Lawsuit Actually Claimed

The plaintiffs accused Jenner of violating federal laws by promoting the JENNER token as a potential investment without registering the token with the SEC as a security. They claimed that Jenner promoted the coin by announcing her intention to donate profits from sales of the token to charity and selling fractional interests in her Olympic gold medal that corresponded with owning the token.

The plaintiffs alleged that these were both promises of future earnings associated with Jenner's activity, and that such promises are sufficient grounds to classify a coin as an investment contract. While the court entertained and considered two amendments to the plaintiffs' complaint, ultimately, the judge found that the plaintiffs had not shown any right to recover damages.

The Howey Test and Where This Case Failed

This ruling was based on the Howey Test which is the standard set by the Supreme Court 1946 for determining whether or not an item qualifies as a security. The Howey Test provides that there exists an investment contract when money is invested into a common enterprise with the expectation of profits coming from the efforts of others; as such the courts have applied the Howey Test since before there was cryptocurrency and have had wildly inconsistent results depending on the particular judge and the facts of the case.

In the case at hand, the court ruled solely on the common enterprise prong. The court determined that plaintiffs could not prove investors had pooled their resources in any meaningful way, or agreed to share profits and losses in any meaningful way and, therefore, even if an investor buys one or more tokens from the open marketplace, it does not by itself create a common enterprise. The court was very clear on this point stating: "Promotion alone is not sufficient evidence of a Common Enterprise."

The fractional ownership concept also did not assist plaintiffs in this case because it was first articulated to the plaintiffs in August of 2024, after Greenfield had already purchased tokens. You can not rely on what somebody said after you purchased to create the investment expectations you had at the time you purchased. The court also noted that the plan was never actually implemented.

What Gets Left Behind

The federal securities claims are dead. The state-level fraud claims — separate from the securities question — were dismissed without prejudice, meaning plaintiffs technically can refile them in California state court. Whether they do is unclear. State fraud cases are harder to win and more expensive to litigate without the class-action structure that federal securities law enables.

For Jenner, this is a clean exit from the most serious legal exposure. For the investors who lost money on a token that went to near-zero, there is not much left to pursue.

Why the Crypto Industry Cares

The JENNER token is just like all the other tokens that came from celebrities in 2024 and 2025; politicians, sports stars, musicians and reality TV stars were all launching memecoins and following the same development process (launch quickly, create excitement, price skyrocket, then price crash). In a lot of cases, after promoting their own token at launch, the celebrity essentially has no involvement with the token anymore.

Now the big question the industry has been pondering recently is: if I tweet about the token I launched and it goes bankrupt — do I now have legal liability in the form of securities law? This ruling signals no because without those three components — pooled funds, structured returns and a real common enterprise — there is no basis for federal securities law violations. Simply promoting a token without the other three things doesn't trigger federal securities law.

It's an important statement not to say that a celebrity can act with impunity and not face legal ramifications — there are still laws against fraud, and the SEC can still enforce these laws against different facts. But the securities law does not dictate that every token that loses value because a celebrity has stopped promoting it would automatically fall within the jurisdiction of securities law.

The Howey test is about an era that existed many years ago; courts continue to work out how to apply that standard to tokens that can go to zero or millions in market capitalisation and back again within a 48 hour period. This is one data point on the subject; it is not the definitive answer; but for now, it is the answer.