Pi Network Faces Renewed Scrutiny After Justin Bons Brands the Project a “scam”

Pi Network is facing renewed scrutiny after Justin Bons, founder of CyberCapital, publicly branded the project a “scam.”

A series of posts on X (formerly Twitter) by Justin Bons, founder of CyberCapital, have seen the executive slam Pi Network for what he described as a “deeply flawed” technology, business model, and tokenomics.

As such, Bons argued that the network is a “scam” that could potentially harm investors.

Is Pi Network a Scam?

Highlighting several issues with the network, Bons began by suggesting that despite its claims of decentralization, Pi Network remains heavily centralized.

“PI is fully permissioned (centralized) and everything requires KYC, even simple transactions! PI is an investment scam; it is that bad,” he asserted.

Furthermore, Bons pointed out that the mainnet launch, which has been delayed for five years, is a testament to the network’s inability to deliver on its promises of innovation and decentralization. Notably, one of the major claims the executive made was that Pi Network’s core technology was copied from Stellar (XLM)

However, Bons argued that the absence of a Turing-complete virtual machine (VM) limits Pi Network’s potential for decentralized finance (DeFi), making it a “pipedream.” According to Bons, this renders the network neither scalable nor programmable.

Another key concern that Bons raised was Pi Network’s referral program, which he likened to a Multi-Level Marketing (MLM) scheme. According to Bons, this system generates unnecessary costs for the network without providing real benefits to users.

“Each user must refer 5 users and complete tasks to unlock the next stage of the 'mining' payload. This is an example of an unneeded cost being passed onto the users to unlock the next stage of the 'mining' payload,” Bons explained.

"The miniumum [sic] requirement is 5, which may vary by stage. This also disincentivises users to invite more than 5, which would be useful for faster development if the goal is to build a large user base quickly."

Further compounding his concerns, Bons highlighted a Ponzi-like mechanism within Pi Network’s “mining” process. As explained by Bons, the lockup period benefits insiders by inflating the token price, allowing early investors to exit with profits.

Finally, Bons touched upon the issue of transparency, or the lack thereof. As highlighted by the executive, despite enforcing Know Your Customer (KYC) procedures, Pi network has failed to disclose insider token allocations. According to Bons’ estimates, insiders might control as much as 20% of the network’s supply, which contradicts the project’s claims of fairness.

“I've seen several reports stating that the founders and team members together hold around 10%, which would leave 80% for the remaining users if true. Even if we assume the optimistic scenario with a user base of 100 million, the founders and team would still retain a minimum of 2% of the total supply, which is a substantial portion considering the scale of the project. This also depends on how many of the 100 million users complete KYC and migrate to mainnet, which we don't have data for,” Bons added.

“PI making it into the top 20 is an embarrassment to our industry.”

Also in the realm of crypto news, Ben Zhou, CEO of Bybit, expressed similar concerns, bluntly calling PI a scam and deeming it "more dangerous than meme coins."

The latest wave of criticism comes amid mounting discontent among pioneers toward Binance. On March 19, the exchange revealed its first batch of Vote to List projects. The list included meme coins associated with the former CEO’s dog and the Mubarak (MUBARAK) token, among others.

However, despite Pi Coin (PI) receiving an 86% vote in favor, the community expressed frustration over Binance's decision not to list the token.

“Stop acting like some third rate junk exchange and fulfill your promises before you start the next vote. I don't know if CZ would have behaved like this if he was still at Binance, he wouldn't be proud of your behavior,” one user wrote on X.

The community members went as far as giving Binance a 1-star rating on the Google Play Store in protest. Nevertheless, this tactic might have had the opposite effect, leading to Binance's rejection of PI listing.

“Do not try to pressure us into listing your coin by spreading FUD or negative comments about Binance, or you will be blacklisted,” Binance noted.

The dual blows of Bons' criticism and Binance's snub have coincided with a devastating market slump for PI. The token's price plummeted below $1.0 today for the first time since late February.

Over the past day, PI has declined by 20.1%, with weekly losses extending to 48.7%. At press time, Pi Coin was trading at $0.91. Its