A US investor filed a lawsuit against the project’s parent company SocialChain Inc., for allegedly conducting a fraud scheme with PI coin that led to $2 million in losses. But according to one market analyst, the case is flawed and “unlikely to succeed.”
An Arizona resident named Harro Moen forwarded a $10 million legal charge on October 24 in the US District Court for the Northern District of California, which names SocialChain Inc., Pi Community Company, and Pi Network leaders as defendants, Cryptopolitan reported earlier today.
Crypto and AI researcher Dr Altcoin has blasted the legal action, propounding that it relies on inaccurate data and weak assertions.
“Moen accuses Pi Network of fraud for dropping the price of Pi from $307.49 to $1.67. The price of Pi has never been above $3 after the CEX listings. The $307.49 figure mentioned in the case is almost certainly an IOU price, which has nothing to do with Pi Network itself,” Dr Altcoin wrote on X.
Pi Network lawsuit has unfounded claims, market analyst says
The plaintiff claims he suffered the losses due to unauthorized token transfers and delayed migration of his Pi tokens to the network’s mainnet. According to the complaint, Moen had 5,137 PI tokens transferred from his verified wallet to an unknown address without authorization in April last year.
The filing also bashes the Pi Core Team for failing to migrate his remaining 1,403 tokens to the Open Mainnet, arguing that they barred him from selling his holdings before they dropped in value.
The lawsuit alleges that Pi Network kept a “centralized control” of tokens even though they had boasted of running a decentralized ecosystem. In addition to the damages, Moen’s attorneys claim the network had only three validator nodes, giving executives undue influence over token transactions.
Dr Altcoin also mentioned the legal complaint labelled Pi as an unregistered security, which he deemed completely unfactual. “He also accuses Pi of being an unregistered security, which is a completely different problem,” the analyst denoted.
He added that the alleged transfer of 5,137 tokens could have occurred through compromised login credentials or phishing attempts.
“Unless he has solid evidence proving that the Pi Core Team was involved, this claim is weak. Anyone with access to his passphrase could have stolen the Pi. Without proof, it cannot be tied to the Pi Core Team.”
The Pi Core Team has not publicly addressed the lawsuit, but the network’s community has been vocal in questioning the plaintiff’s claims. Pioneers and opponents believe the alleged unauthorized transfers came as a result of individual security failures, not misconduct from the Pi Core team side.
Pi token price ‘$307’ discrepancy questioned
Pi Network launched its Open Mainnet in February, with OKX as the first exchange listing PI at a base price of $2. The token later reached an all-time high of $2.99 that same month, a stark contrast to the $307.49 valuation cited in the lawsuit.
“Where did it come from ‘$307.49’? —Not even the value of IOU was that high. Furthermore, from a legal point of view, the Open Market Value ≠ IOU value. The lawsuit is based on false equivalence,” a Redditor on the Pi community queried.
The project is still trying to fend off rumors of being a fraudulent ecosystem since its debut in 2019. On December 5, seven major Chinese financial associations issued a joint warning citing Pi Coin as an example of a “valueless virtual asset.”
The groups included the National Internet Finance Association of China, China Banking Association, Securities Association of China, Asset Management Association of China, China Futures Association, China Association for Public Companies, and Payment and Clearing Association of China, who all urged investors and platforms to avoid issuing or trading virtual currencies and real-world asset tokens.
“Recently, the concept of virtual currencies has become widespread, and some criminals have exploited it to promote trading and speculation,” the statement said. It cited stablecoins, valueless coins like Pi Coin, real-world asset tokens, and mining schemes as tools for illegal fundraising, pyramid schemes, and profit transfers.
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