Quick Takeaways
- Pi Network faces a $10 million federal fraud lawsuit filed by an Arizona investor.
- Claims include unauthorized token transfers and alleged secret sales of 2 billion Pi tokens.
- The Pi community disputes core accusations and challenges the plaintiff’s price assumptions.
Investor Alleges Massive Fraud Scheme and Secret Token Sales
SocialChain Inc., the parent company of Pi Network, now faces a $10 million lawsuit after an investor accused the project of orchestrating a long-running fraud scheme.
The complaint claims the team secretly sold 2 billion Pi tokens, delayed network migration, and conducted unauthorized transfers that led to a sharp price collapse.
Filed on October 24 in the US District Court for the Northern District of California, the case targets founders Chengdiao Fan and Nicolas Kokkalis. It alleges that these actions violated federal securities laws and misled Pi holders.
Unauthorized Transfers and Delayed Migration Form the Core of the Complaint
The plaintiff, Harro Moen Moen of Arizona, argues he suffered major losses due to alleged misconduct by the Pi Core Team.
He claims 5,137 Pi tokens left his verified wallet without his permission on April 10, 2024.
He also states that 1,403 of his remaining tokens never migrated to the Pi Mainnet.
The suit asserts these issues sit alongside “secret token sales” and “centralized control” despite Pi Network’s repeated claims of decentralization.
A case summary states that the alleged actions caused Pi’s value to fall from $307.49 to $1.67, a claim the community quickly disputed.
Community Rejects Price Assumptions and Challenges Technical Claims
The Pi Core Team has yet to announce, so Pioneers are taking charge in responding.
Numerous members of the community contend that unauthorized transfers usually happen because credentials have been compromised, rather than due to internal wrongdoing.
They additionally challenge the plaintiff’s approach to valuation. Pi initiated its Open Mainnet in February, and OKX set Pi’s floor price at $2.
The token peaked at $2.99, far below the $307 figure cited in the lawsuit.
Community members believe the plaintiff relied on IOU trading values, which Pi Core Team has long warned against.
One user wrote that “Open Market Value ≠ IOU Value,” calling the lawsuit’s assumptions a “false equivalence.”
Legal Case Deepens Internal Debate as Pi Core Team Remains Silent
The legal case claims that Pi qualifies as a security, introducing a regulatory aspect to the conflict. Experts caution that if this assertion is confirmed, it might transform the trajectory of the project in the United States.
At present, the community is split. Certain members call for openness from the Pi Core Team. Some consider the assertion unfounded. Think the proof will fail under federal examination.
As the matter is currently, in front of Judge Nathanael M. Cousins, the resolution depends on the court’s interpretation of the valuations classification of securities and the proof supporting the claimed unauthorized transfers.
Until then, Pi Network faces one of its most significant legal challenges since launch.