A US investor has filed a lawsuit against SocialChain Inc., the parent company of the Pi Network project, alleging a fraud scheme involving PI coin that resulted in $2 million in losses. However, according to one market analyst, the case is flawed and "unlikely to succeed."
An Arizona resident named Harro Moen filed a $10 million legal charge on October 24 in the US District Court for the Northern District of California. The lawsuit names SocialChain Inc., Pi Community Company, and Pi Network leaders as defendants.
Crypto and AI researcher Dr. Altcoin has criticized the legal action, asserting 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 Faces Scrutiny Over Unfounded Claims
The plaintiff claims he suffered 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 criticizes the Pi Core Team for failing to migrate his remaining 1,403 tokens to the Open Mainnet, arguing that they prevented him from selling his holdings before their value decreased.
The lawsuit alleges that Pi Network maintained "centralized control" over tokens despite boasting of operating a decentralized ecosystem. In addition to damages, Moen's attorneys claim the network had only three validator nodes, granting executives undue influence over token transactions.
Dr. Altcoin also addressed the legal complaint's characterization of Pi as an unregistered security, which he deemed factually incorrect. “He also accuses Pi of being an unregistered security, which is a completely different problem,” the analyst stated.
He further noted that the alleged transfer of 5,137 tokens could have occurred due to 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 responded to the lawsuit. However, the network's community has actively questioned the plaintiff's claims. Many users believe the alleged unauthorized transfers resulted from individual security failures rather than misconduct by the Pi Core Team.
Discrepancy Over Pi Token Price of '$307' Questioned
Pi Network launched its Open Mainnet in February, with OKX being the first exchange to list PI at a base price of $2. The token later reached an all-time high of $2.99 in the same month, a significant 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 questioned.
The project has been working to counter 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 associations 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. They 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 read. It identified stablecoins, valueless coins like Pi Coin, real-world asset tokens, and mining schemes as tools used for illegal fundraising, pyramid schemes, and profit transfers.