Pi Coin News: Pi Network Hit with $10 Million Fraud Lawsuit, Secret Sale of 2 Billion Tokens Sparks Trust Crisis

Pi Network, known for its “mobile mining” concept and its massive user base, is facing the most severe challenge in its history. In early December, the U.S. District Court for the Northern District of California accepted a class action lawsuit against Pi Network’s parent company, SocialChain Inc., and its founders, with the plaintiffs seeking damages of up to $10 million. The lawsuit alleges a years-long fraudulent scheme by the project team, including unauthorized transfers of user tokens, secretly selling as many as 2 billion Pi tokens, and intentionally delaying the mainnet migration to devalue assets. Although the Pi core team has so far remained silent, the community has strongly questioned the key data cited in the lawsuit. Hit by this news, the PI token price dropped 5%, and technical analysis shows it is hovering at a critical support level, making its future direction highly uncertain.

$10 Million Lawsuit Storm: Core Allegations and Community Counterattack

A federal securities fraud lawsuit with a target value of $10 million has materialized the clouds that have long hung over Pi Network into concrete legal documents. According to court records, the plaintiff, Harro Moen, accuses Pi Network and its co-founders Chengdiao Fan and Nicolas Kokkalis of orchestrating and executing a complex fraudulent plan, directly resulting in significant investment losses.

The core allegations of the lawsuit focus on three aspects, each striking at the foundation of the project’s credibility. First, the plaintiff claims that 5,137 PI tokens in his account were transferred without authorization to an unknown address on April 10, 2024, alleging this was part of a systemic sell-off of user assets by the project team, supposedly totaling up to 2 billion PI. Second, the plaintiff accuses Pi Network of deliberately delaying the migration of his remaining 1,403 tokens to the mainnet, exposing them to the risk of a sharp drop in value. Third, and most controversially, the lawsuit states that despite Pi Network’s public claims of being a decentralized network, it actually only operates three validator nodes, meaning the project team exercises complete centralized control over the network.

However, these allegations have sparked a huge uproar and strong rebuttal within Pi Network’s vast “Pioneer” community. Community members quickly pointed out that the price data cited by the plaintiff in calculating losses is seriously inaccurate. The lawsuit summary mentions the token’s value plummeting from $307.49 to $1.67, but after the PI token’s official mainnet launch in February this year, its opening “floor price” on the first mainstream exchange was around $2, and its historical high never exceeded $3. The community generally believes that the $307.49 figure likely comes from unofficial “IOU” futures trading, which the Pi core team has repeatedly warned is unrecognized and extremely risky. Regarding the unauthorized transfer, many users believe it is more likely due to phishing attacks or private key leaks, rather than actions by the project team.

Pi Network Lawsuit Event and Key Market Data Overview

Lawsuit Core Information:

• Plaintiff: Harro Moen
• Defendants: SocialChain Inc. (Pi Network parent company), co-founders Chengdiao Fan, Nicolas Kokkalis
• Claim Amount: $10 million
• Court: U.S. District Court for the Northern District of California
• Key Allegations: 1. Unauthorized transfer of user tokens; 2. Secret sale of 2 billion PI tokens; 3. Intentional delay of mainnet migration; 4. Operating only three validator nodes, effectively centralized control; 5. Issuance of unregistered securities.

Market & Project Data:

• Current Price Reaction: After the news broke, the PI token price fell about 5%.
• Official Mainnet Historical Price: Launched in February 2025, first exchange opening price around $2, historical high about $2.99.
• Plaintiff’s Claimed Historical High: $307.49 (community suspects this is an IOU futures price, not officially recognized).
• Daily Token Unlock: On average about 6.1 million PI/day.
• Technical Key Level: Current price testing the confluence of the 0.5 Fibonacci retracement level and the lower boundary support of a two-month ascending triangle.

Technical Crossroads: A Rebound Amid Lawsuit Overhang or Value to Zero?

Leaving aside the legal dispute, from a purely market trading perspective, the PI token price is at an extremely critical technical juncture. Before the lawsuit news dampened market sentiment, the PI price chart was actually forming a two-month ascending triangle, a pattern typically seen as a bullish continuation. The price is currently testing the lower boundary support of this pattern, which also powerfully resonates with the 0.5 Fibonacci retracement level.

From momentum indicators, there appears to be a glimmer of hope for a technical rebound. The Relative Strength Index (RSI) has rebounded from near-oversold territory, often seen as a short-term bottom signal during corrections. At the same time, the Moving Average Convergence Divergence (MACD) is slowly moving closer to the signal line, potentially forming a “golden cross,” which is usually interpreted as a sign of waning downward momentum and the start of upward strength. If this key support area can successfully hold and is accompanied by increased trading volume, it could theoretically trigger an upward breakout, targeting the ascending triangle’s theoretical target of around $0.40, which means over 8% potential upside from current levels.

However, the sudden appearance of a $10 million lawsuit injects a huge fundamental variable into this already delicate technical balance. Panic and loss of trust in the market could fundamentally weaken buying power, causing technical support to fail. If the price breaks below the current support area, the next target is directly around the historical low of $0.15, implying a nearly 30% downside. In a more pessimistic scenario, if $0.15 also fails to hold, due to the lack of dense historical support below, the price could quickly slide to $0.075 (the 1.618 Fibonacci extension), facing up to a 65% potential drop. Technical analysis often loses much of its effectiveness in the face of strong negative fundamentals.

Deep Trust Fractures: The “Decentralization” Narrative Faces Its Toughest Test

Regardless of the lawsuit’s final outcome, it has already put Pi Network’s long-term core narrative—“bringing decentralized digital currency to ordinary people”—under the microscope for its most rigorous scrutiny yet. The allegation that “only three validator nodes are operating,” if proven, would undoubtedly be a fatal blow to its decentralization claims. In the blockchain world, the degree of node decentralization is the gold standard for measuring a network’s censorship resistance and security. A network controlled by just a handful of nodes remains entirely under the founding team’s control, fundamentally different from truly decentralized networks like Bitcoin or Ethereum, which are maintained by thousands of independent nodes around the globe.

This trust crisis comes at a critical moment when Pi Network most needs to build out its ecosystem and applications. The project launched its open mainnet in February this year, but still lacks any “killer” apps or clear use cases to attract users and developers. Its growth model heavily relies on community members’ “click mining” and viral social growth, rather than real demand based on network utility. Now, with the additional impact of the lawsuit, already hesitant third-party developers and business partners may pull even further away, causing ecosystem development to stall. Meanwhile, ongoing token unlocks (an average of 6.1 million per day) bring a constant wave of selling pressure to the market, and without enough buying to absorb it, liquidity problems could worsen further.

Potential Regulatory Minefield: Far-Reaching Impact of Unregistered Securities Allegation

In addition to direct fraud accusations, another potentially industry-shaking allegation in this case is the plaintiff’s claim that the PI token is an unregistered security. This strikes at the heart of U.S. SEC regulation. If the court ultimately accepts this view and rules that PI’s token issuance and sales constitute an unregistered securities offering, not only would Pi Network face huge fines and operational restrictions, but it would also serve as a warning for all projects using similar “pre-mining,” “airdrop incentives,” or “mobile mining” models.

Although Pi Network has always emphasized that its tokens are mined for free and not sold, regulators determine whether something is a security based on the definition of an “investment contract”—that is, whether there is a financial investment, an expectation of profit in a common enterprise, and profits derived primarily from the efforts of others. Pi Network’s business model and user growth story could well be interpreted as meeting these conditions. The progress of this case will be an important indicator of how U.S. courts apply the Howey Test to emerging cryptocurrency models. Its outcome may force the entire industry to design user incentives and token distribution mechanisms more cautiously to avoid potential securities law risks.