A group of investors has initiated a $100 million lawsuit against executives of the Cere Network, a blockchain data project based in San Francisco. This legal action was filed on Tuesday in a U.S. federal court, with the plaintiffs accusing the company”s insiders of committing fraud, racketeering, and executing a token dump following the platform”s launch in 2021.
The complaint highlights that the business prospects, token restrictions, and customer traction were misrepresented by Cere Network and its CEO, Fred Jin. Jin is named as a primary defendant, alongside several others.
According to the court filing, Cere Network presented itself as a decentralized data storage solution utilizing independent servers to address the growing demand for secure cloud data services. Investors were informed that the CERE Token would facilitate payments and governance on the platform and was expected to secure listings on major exchanges like Binance. Proceeds from token sales were purportedly intended for infrastructure development.
One plaintiff, Lujunjin “Vivian” Liu from Cupertino, claims she was recruited by Jin to serve as a senior strategic advisor and was promised compensation in CERE tokens. Liu asserts that from 2019 to 2021, she dedicated significant time and resources to the project, including personal investments through her firm, Goopal Digital Ltd. Cere reportedly raised approximately $50 million through both private and public token sales in November 2021.
Investors were assured that insider tokens would be locked up to prevent early sales by insiders and maintain market stability for CERE. However, the lawsuit alleges that these assurances were misleading as insiders began unloading large amounts of tokens shortly after trading commenced, leading to a significant decline in token price. Initially priced at $0.45, CERE plummeted to around $0.06 within weeks and is currently trading at approximately $0.0003384, representing a drop of over 99% from its peak.
The complaint states that while employees and external investors were subject to lockup periods, Jin and his associates were not effectively bound by these restrictions, allegedly selling over $41 million worth of tokens on public exchanges shortly after the launch. The funds from these sales were reportedly transferred into personal cryptocurrency wallets.
Additionally, the lawsuit suggests that millions raised for the Cere project were funneled into shell companies and accounts linked to Jin and his partners. The plaintiffs also claim that Jin utilized automated bots from Gotbit Ltd. for wash trading activities. Notably, the founder of Gotbit was convicted for wire fraud and market manipulation in June of the previous year.
In their lawsuit, Liu and Goopal are seeking $25 million in compensatory damages and $75 million in punitive damages.
This federal lawsuit coincides with another legal challenge that was filed in Delaware two weeks prior. Ken Wang, co-founder of Cerebellum Networks, has accused the same defendants of misappropriating approximately $58 million in Cere token assets. Wang”s complaint alleges that “secret token dumps” began immediately after the initial coin offering (ICO) on November 8, 2021, with around $41.78 million in tokens allegedly moved from the company”s treasury to exchanges and sold through accounts associated with Jin and others.
The Delaware court filing also claims that at least $16.6 million was misappropriated from a Regulation D fundraising wallet, with funds directed to personal wallets that were used for trading, resulting in losses exceeding $9.78 million. Jin is accused of gaining control of over 86% of the financial documents, having allegedly misled shareholders and advisors with fabricated financial reports, understated fundraising figures, and misrepresentations regarding multi-signature wallet information.
As this situation unfolds, it underscores the complex challenges facing blockchain projects and the critical importance of transparency and accountability in the cryptocurrency sector.
