Pi Network Denies Lawsuit Allegations, Says No Secret Token Sale Took Place

SocialChain Inc., the company behind Pi Network, is facing a $10 million lawsuit after a user accused it of orchestrating a fraud scheme.

The complaint alleges that the company conducted unauthorized token transfers, secretly sold 2 billion Pi tokens, and deliberately delayed network migration. These actions reportedly triggered a dramatic collapse in the token’s price. However, the Pi team has denied these allegations.

Federal Securities Fraud Lawsuit Challenges Pi Network Leadership

According to court documents, the lawsuit was submitted on October 24 in the US District Court for the Northern District of California. It is assigned to Judge Nathanael M. Cousins. The complaint targets Pi Network founders Chengdiao Fan and Nicolas Kokkalis, as well as SocialChain Inc.

The plaintiff, Harro Moen of Arizona, alleges a multi-year scheme that resulted in substantial financial losses. He is seeking $10 million in damages.

Moen claims that 5,137 Pi tokens were transferred from his verified wallet to an unknown address without his authorization on April 10, 2024. He further added that the situation was worsened by the failure to migrate his remaining 1,403 tokens to the Pi Network Mainnet.

“The complaint, brought by Bulldog Law on behalf of an Arizona cryptocurrency investor, alleges that the defendant and its executives conducted a massive fraud scheme through unauthorized token transfers, secret sales of 2 billion Pi tokens and deliberate migration delays that caused token values to plummet from $307.49 to $1.67,” the summary read.

The Pi team has clearly denied the allegations regarding the token sale.

“We did not conduct a secret sale of 2 billion Pi tokens as alleged by this complaint,” Pi told BeInCrypto.

The complaint also argues that despite marketing Pi Network as decentralized, the defendants allegedly maintained centralized control by operating only three validator nodes.

“Node structure is publicly visible on the blockchain and as communicated in node announcements,” the team stated.

Community Debunks Claims in The Filing

The Pi Core Team further stated that it intends to vigorously defend against the legal case.

“Pi vehemently denies the frivolous allegations set forth in the referenced complaint and will vigorously defend the company in this matter. As a courtesy and to provide a more fulsome response, we will provide a copy of our Motion to Dismiss once filed in the matter.”

Furthermore, the Pi community has been quick to challenge several of the plaintiff’s claims. Many Pioneers argue that unauthorized token transfers could stem from compromised login credentials or phishing attempts. They added that these incidents do not prove any wrongdoing by the team.

It is also worth noting that Pi Network launched its Open Mainnet in February. OKX, the first exchange to list Pi, introduced it with a floor price of $2. The Pi coin reached an all-time high of $2.99 later that month. This raises the question of how the plaintiff arrived at a $307.49 price valuation.

Community members have suggested that a substantial portion of the plaintiff’s argument is based on losses tied to IOU trading. The Pi Core Team has consistently warned against this price.

“Where did “$307.49″ come from—even the IOU value was never that high. Also, from a legal standpoint Open Market Value ≠ IOU Value. The lawsuit is based on false equivalence,” a user wrote on Reddit.

Overall, the lawsuit has intensified debate within the Pi community. With the community members challenging key claims, the outcome will depend on how the court evaluates the evidence behind the alleged losses and valuation discrepancies.