Executive Summary

Chinese public security bodies and state media, including 无锡网上公安 and CCTV, have issued official warnings classifying Pi Network as a virtual currency scam. This project is characterized by attributes commonly associated with pyramid schemes, primarily targeting and exploiting elderly individuals. Despite claims of a live Open Mainnet and a large user base, Pi Network continues to lack listings on most mainstream cryptocurrency exchanges, possesses no stable market price, and cannot be readily traded or converted into fiat currency. This absence of real economic value outside its controlled ecosystem has led to its description as an "air coin future." The scheme leverages social networks and promises of wealth, preying on unfamiliarity with digital technologies and financial anxieties, resulting in significant financial losses for victims.

The Pi Network Event in Detail

Pi Network presents itself as a mobile-first, inclusive blockchain, claiming over 60 million users and having launched an Open Mainnet on February 20, 2025. However, this transition has not led to widespread exchange listings or external liquidity for its native Pi Coin, which currently trades at approximately $0.354486 per PI/USD with a reported market capitalization of $2.91 billion. Critics contend that the network maintains centralized control, despite purporting decentralization. A CNN report in 2025 indicated that Pi Network's mainnet nodes are centrally operated by the core team. The project's "social mining" model, utilizing "Security Circles" and a referral system instead of traditional proof-of-work or stake mechanisms, has drawn comparisons to multi-level marketing (MLM) schemes. Furthermore, mandatory Know Your Customer (KYC) procedures raise data privacy concerns due to centralized storage of sensitive user data. Initial zero-investment mobile mining gradually induces users to spend on "acceleration nodes" and "courses," coupled with a multi-level recruitment model, which are hallmark characteristics of the alleged fraudulent scheme.

Financial Mechanics and Business Strategy Critique

The financial mechanics of Pi Network deviate significantly from those of established cryptocurrencies. Unlike projects with liquid, tradable tokens on major exchanges, Pi Coin exhibits limited utility and liquidity beyond its proprietary ecosystem, making it effectively an illiquid asset for most users seeking to convert it to fiat currency. The financial model appears to rely on a deferred promise of value, where users accumulate balances within a closed system in anticipation of future integration into an open market, which has largely not materialized in a meaningful, broadly accessible way. The business strategy, while promoting mobile accessibility and user growth through referrals, is critiqued for its lack of transparency, vague timelines, and dependence on what is perceived as an MLM structure. This contrasts with the fundamental principles of decentralization and trustlessness that underpin much of the broader blockchain and Web3 ecosystems. The scheme's inducement for "voluntarily spending" on non-tangible acceleration nodes or educational courses, coupled with recruitment incentives, serves as a primary method of monetization within the project.

Broader Market Implications

The controversy surrounding Pi Network exacerbates the existing "trust problem" within the broader Web3 ecosystem, particularly for new and prospective users who remain skeptical due to past scams and market volatility. This situation reinforces negative public perceptions of unregulated cryptocurrency projects, especially those employing multi-level marketing tactics and targeting vulnerable demographics such as the elderly. The global cost of cryptocurrency scams reached an estimated $9.9 to $10.7 billion in 2024, with AI-generated fraud and "pig butchering" schemes contributing significantly. The opacity and difficulty in reversing crypto transactions make them attractive to fraudsters. This highlights the urgent need for enhanced financial literacy, robust consumer protection measures, and more stringent regulatory oversight in emerging technological spaces. The impact extends beyond financial loss, with many victims experiencing severe emotional and psychological distress, and funds typically unrecoverable once transferred. Regulatory bodies globally are increasing efforts, with frameworks like FATF, MiCA in the EU, and proposals in the UK and US for stablecoin legislation emphasizing cross-border information sharing, AML/KYC checks, and advanced transaction monitoring to combat fraud.

Expert Commentary and Regulatory Response

High-profile figures and regulatory bodies have voiced strong concerns regarding Pi Network. Bybit CEO Ben Zhou publicly condemned the project as a scam, citing authenticity concerns and confirming that Bybit would not list the Pi token. Zhou explicitly rejected allegations that Bybit had previously declined a listing request, stating none had ever been made. Concurrently, Chinese authorities, including the Hengyang Public Security Bureau, issued official warnings as early as 2023, directly labeling Pi Network as a scam. These warnings underscored the significant risks, including potential personal data leaks and substantial financial losses for elderly individuals' pensions. While some exchanges, such as OKX and Bitget, have chosen to list the Pi token, a significant portion of the cryptocurrency industry maintains a cautious stance. Furthermore, the UK's Financial Conduct Authority (FCA) has repeatedly warned consumers about the high risks associated with crypto investments and unregulated cloud mining schemes, advising individuals to be prepared to lose all invested money, echoing the sentiment of caution surrounding projects like Pi Network.