1️⃣ Regulatory Crackdown: Chinese Authorities Uncover Alleged Fraud
In February 2025, China’s Ministry of Public Security launched a large-scale investigation into what it describes as the world’s largest “air coin” fraud. Authorities froze 18,000 accounts, arrested 37 key promoters, and uncovered illicit funds exceeding ¥23 billion. Reports suggest that a leading Pi Coin promoter’s mansion contained bundles of cash, while their garage housed a fleet of luxury vehicles, allegedly purchased with investors’ money.
Judicial Report Confirms Centralization
An official report from the Shanghai Blockchain Judicial Appraisal Center revealed that:
✅ Pi Coin’s “mainnet” is a centralized database hosted on Alibaba Cloud.
✅ The plagiarism rate exceeds 91%, with large portions copied from existing blockchain projects.
✅ Transaction records can be altered at will, raising concerns over transparency and legitimacy.
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2️⃣ The Pi Coin Py ramid Scheme: Layers of Deception
🔺 The “Stanford PhD” Illusion
Founder Nicolas Kokkalis is alleged to have left the project long ago, with his official website image traced back to a 2015 academic event.
Pi Coin’s white paper reportedly plagiarized large sections from Cardano, Polkadot, and other blockchain projects, with key sections generated by AI.
📈 Recruitment Profits & High Commissions
Promoters allegedly earned up to 32% in commissions for recruiting new users.
Reports claim that a housewife in a third-tier city made ¥800,000 per month solely from recruitment.
A “brainwashing script library” with 478 pre-written sales pitches was allegedly used to persuade investors, including phrases like:
“Not mining Pi means giving up financial freedom.”
💰 Heavy Losses for Ordinary Investors
60% of Pi Coin’s user base is reportedly over 50 years old, with some mortgaging their homes to acquire Pi accounts.
A retired teacher in Hebei allegedly invested ¥380,000 in retirement savings, only to see their account become worthless.
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3️⃣ Exposing the Technical Illusions Behind Pi Coin
🔍 Blockchain or Fake Chain?
Pi Coin’s transaction speed (TPS) is only 7, less than 1/10 of Bitcoin’s capacity.
Analysis revealed that 73% of network nodes are controlled by a single IP range, indicating heavy centralization.
⛏ “Mining” or Just a Timer?
Reverse-engineering of the Pi mining app allegedly showed that mining is merely a timer-based function, with no actual computational work being performed.
Developers reportedly had backend access to modify users’ “mining power” at will.
💸 Evidence of a Fund Scheme
On-chain data suggests early developers continuously sold off Pi Coin, with one address transferring out 23,000 ETH in a single month.
Allegations indicate that illicit funds were used to purchase a 47-story office tower in Dubai, labeled the "Pi Global Ecological Center."
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4️⃣ Evolution of Crypto Ponzi Schemes: From Five Elements Coin to Pi Coin
📜 Rebranded Scams, Same Playbook
2017: Five Elements Coin – Marketed as a “national secret project”.
2021: Pi Coin – Branded as a “Stanford blockchain revolution”.
The core structure remains unchanged:
Recruitment-based rewards + Promises of high returns + Fake endorsements.
🎯 Targeting the Middle-Aged & Elderly
Square Dance Marketing – Advertisements played via loudspeakers at dance gatherings in 300 cities.
Health Seminar Tactics – Free giveaways (eggs, cooking oil) used as bait to encourage attendees to download the Pi mining app.
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5️⃣ How to Identify the Next Pi Coin
🚨 Six Red Flags of a Crypto Ponzi Scheme
✅ “Zero-Cost Wealth” promises with no upfront investment.
✅ Mandatory recruitment of new members to generate income.
✅ Claims of government backing with no verifiable sources.
✅ Censorship of skeptics within the community.
✅ Hosted on overseas servers to evade regulations.
✅ Founder’s identity is unclear or their credentials are misrepresented.
🔎 Key Warning Signs of a Scam Token
No functional product or transparent development process.
No open-source code (Pi Coin’s GitHub repository hasn’t been updated since 2020).
No security audits from trusted firms (legitimate projects undergo CertiK audits).
No real on-chain transactions—check the block explorer to verify activity.
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🔮 The Future of Crypto Scams: What Comes Next?
The collapse of Pi Coin may not be the last of its kind. With AI-generated white papers, deepfake endorsements, and metaverse-based pyramid schemes, future crypto scams could become even more sophisticated.
Stay vigilant. Stay informed. Protect your investments.
