Pi Network founder accused of misappropriating $20 million, investors panic sell!

Pi Network (PI) has fallen into serious internal disputes, with former executive McPhilip publicly accusing co-founder of misappropriating $20 million in funding and attempting to dilute his shares, resulting in a big dump of Pi Coin, which fell 22% within a week, dropping out of the top 50 in Crypto Assets by market capitalization. Meanwhile, the community questions why the team has failed to establish an ecosystem and insists on absurd "global consensus value" pricing each Pi coin at $314,159, while the actual trading price is only $0.25.

Pi Network Internal Power Struggle: The Fate of $20 Million in Funding Remains a Mystery

A series of accusations recently made public by former Pi Network executive McPhilip has revealed the dark side behind this once highly regarded crypto project. According to McPhilip, he was unfairly removed from the project, and the 20 million USD funding obtained by the project is suspected to have been abused.

These allegations are not unfounded. Court documents submitted in 2020 show that there was a serious internal dispute between co-founder Dr. Nicolas Kokkalis and Fan Chengdiao, which reportedly led to an extremely poor working environment. It is worth noting that Fan Chengdiao is scheduled to speak at the TOKEN2049 event this week (October 1 to 2), which is particularly noteworthy in light of the current controversy.

Equity Dilution and Rights Deprivation: Internal Struggles of the Founding Team

McPhilip's allegations further reveal the internal power struggle within the project. He claims that other co-founders attempted to issue new shares at an extremely low price of $0.00005 per share, intending to dilute his ownership percentage. This action is particularly questionable, as the company had just completed financing in 2019-2020, reaching a valuation of $20 million.

"After the escalation of internal conflicts, all my access to the company servers, financial accounts, and operational tools was revoked," McPhilip stated in a public announcement, "This is a planned power grab aimed at excluding me from the project I helped create."

Where the 20 million USD funding went: Failure in ecosystem construction

Members of the Pi Network community have begun to question why the development team has failed to utilize the $20 million in funding to establish a real ecosystem. A well-known member of the Pi community, Mr. Spock, bluntly pointed out in a widely circulated post:

"The core team secured $20 million in funding in 2019. With this capital, they could have established a complete ecosystem with 100 applications in 2020, but they chose to conceal this from us and investors. All along, they had the funds to build the Pi Network the right way, but there were control conflicts and personal issues among the founders."

This accusation points directly to the core issue of the Pi Network project: despite having ample funding, the team seems to have failed to convert these resources into actual ecosystem development. This has resulted in Pi coin lacking true utility from the very beginning, becoming a shell project sustained only by promises and visions.

Lack of Transparency and Communication Breakdown

These controversies also explain why there is a significant communication gap between the Pi core team and its vast user base. Although Pi Network claims to have tens of millions of users, the core team's ongoing silence on critical issues has raised community concerns about the project's transparency.

Especially in the case of multiple delays in the mainnet release, the team has failed to provide a clear roadmap and progress reports, which has further exacerbated the community's dissatisfaction. Although there has been progress on the protocol v23 testnet recently, the trust within the Pi community is rapidly declining due to unresolved core issues.

Pi Coin market performance: fell from top 15 to outside top 50

(Source: CoinMarketCap)

Under the influence of these negative news, the market performance of Pi Coin has drastically worsened. In the past week, the price of Pi coin has experienced a big dump of 22%, currently hovering around the support level of $0.25. This fall has caused Pi coin to drop out of the top 50 in the market capitalization ranking of Crypto Assets, in stark contrast to its earlier glory of being among the top 15 Crypto Assets earlier this year.

Despite rumors circulating in the market that Pi is about to be listed on mainstream exchanges, these reports have not stopped the wave of sell-offs from investors. The continued delays in the release of the mainnet, coupled with the core team's failure to provide a concrete development plan, have severely damaged investor confidence.

Global Consensus Value (GCV) Controversy: 314,159 USD vs 0.25 USD

Another major controversy facing Pi Network is its insistence on maintaining the "Global Consensus Value" (GCV) mechanism. The core team has set the "consensus value" of each Pi coin at 314,159 USD (derived from the mathematical constant π), a figure that differs from the actual market trading price of 0.25 USD by more than a million times.

This obviously unrealistic pricing mechanism is seen by many analysts as a symbol of the project's lack of seriousness, further undermining market trust in Pi Network. A cryptocurrency analyst stated, "When a project insists that the value of its token is a million times the actual market price, it either indicates extreme self-deception or suggests deeper issues."

Community Reaction: From Enthusiastic Support to Questioning Doubts

Pi Network has attracted millions of users worldwide with its innovative model of "earning Crypto Assets without mining equipment." However, as controversies continue to accumulate, community sentiment is undergoing a noticeable shift.

Many early supporters have begun to publicly question the feasibility of the project and the integrity of the team. Discussions on social media have shifted from early enthusiastic support to deep skepticism about the project's future. An active community member stated on Twitter: "We have been clicking the button every day for three years, but have yet to see any substantial progress. Now learning that the team secured $20 million in funding as early as 2019 raises doubts about whether we have been used as free labor."

Continuous delays in mainnet release

The mainnet launch plan of Pi Network has been postponed multiple times, which is seen as a clear sign of stagnation in the project's technical development. Although the team occasionally releases updates about technical progress, the lack of a clear timeline and verifiable milestones greatly undermines the credibility of these statements.

A blockchain development expert commented: "From a technical perspective, the development progress of Pi Network lags far behind its promotion and user growth. A network with tens of millions of users should be able to launch its mainnet faster if it secures sufficient funding."

Future Outlook: Can Pi Network Turn the Tide?

In the face of these severe challenges, the future direction of Pi Network is highly anticipated. Analysts believe that to rebuild trust and restore market confidence, the project needs to take the following key steps:

Enhancing financial transparency: Disclosing the use of the $20 million funding and undergoing independent audits.

Address internal governance issues: clarify the leadership structure and resolve disputes among the founders.

Accelerated mainnet launch: Providing a clear timeline and verifiable technical milestones.

Establish a real ecosystem: invest resources to develop practical applications and use cases.

Adjust the pricing mechanism: abandon the unrealistic "global consensus value" and adopt market-based pricing.

Investor Advice: Risk Assessment and Investment Strategy

For individuals who already hold Pi coins or are considering investing, analysts have provided the following advice:

Stay cautious: Avoid increasing investments until the project resolves core issues.

Pay attention to the official statement: especially regarding clarifications on financing use and internal governance.

Assessing technological progress: The actual progress of the mainnet release is a key indicator for judging the project's prospects.

Diversify your investments: Do not overly concentrate your portfolio on a single high-risk asset.

Conclusion: A Critical Moment Amid the Crisis of Trust

Pi Network is facing a critical moment in its development history. The opaque use of $20 million in funds, power struggles among founders, ongoing delays in the mainnet release, and a pricing mechanism detached from reality have collectively created a serious trust crisis.

The big dump in Pi Coin prices and the decline in market capitalization ranking are direct responses from the market to these issues. If the core team cannot take swift action to address these fundamental problems, Pi Network may face more severe market reactions and user loss.

However, crises can also be opportunities. If the team can face the issues head-on, increase transparency, accelerate technological development, and establish a true ecosystem, Pi Network still has the potential to regain community trust and achieve its original vision.

The speeches by Fan Chengdiao at the TOKEN2049 event in the coming weeks, as well as the team's response to these controversies, will serve as an important indicator for judging the future direction of the Pi Network.