Pi Network Faces New Scam Allegations; Experts Raise Concerns

Pi Network, a cryptocurrency project known for enabling mining through smartphones (the process of generating digital currency using mobile devices), is again facing serious allegations. Justin Bons, founder of CyberCapital, recently labeled the project fraudulent, highlighting concerns about centralization, transparency, and technological originality.

Questions About Centralization and Innovation

Justin Bons stated on his social media channels that Pi Network, despite promising decentralization (meaning no centralized control), shows a high degree of centralization. He highlighted that even simple transactions require Know Your Customer procedures (KYC, an identity verification process), contradicting the decentralized principles of cryptocurrencies.

Bons also pointed out that Pi Network’s underlying technology appears to have been copied from the cryptocurrency Stellar (XLM), thus offering no significant innovation.

Another issue raised by Bons was the five-year delay in the official launch of the mainnet (the primary network used to conduct real transactions), further fueling doubts about the legitimacy and seriousness of the project.

Pi Network: Concerns Over Business Model and Transparency

Bons further compared Pi Network’s referral program to Multi-Level Marketing schemes (MLM, a business model where profits rely on recruiting new members), suggesting it generates additional costs without genuinely benefiting users. Additionally, he noted that Pi Network’s mining method might resemble a Ponzi scheme (a fraudulent structure where new investors pay the profits of earlier investors), as early participants could benefit significantly from artificially inflated token prices.

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Another concern was the lack of transparency, with insiders (people within the project) reportedly controlling about 20% of the total token supply. This directly contradicts the project’s promises of fairness and equality in token distribution.

Market Impact and Community Reaction

These allegations come at a delicate time, coinciding with a sharp decline in Pi Coin’s value, which recently fell more than 20%. Ben Zhou, CEO of the cryptocurrency exchange Bybit, also expressed similar concerns, warning about risks associated with the project.

The cryptocurrency community remains divided, with some users defending Pi Network, while others reinforce the criticisms made by experts. So far, the Pi Network team has not issued an official response to these latest accusations.