Cere Network Lawsuit: Co-founder Faces Devastating $100M Fraud Allegations in Pump-and-Dump Scheme
In a stunning legal development that has rocked the cryptocurrency infrastructure sector, Cere Network co-founder Fred Jin and the company’s board now face devastating allegations of orchestrating a $100 million fraud through what plaintiffs describe as a sophisticated pump-and-dump scheme. This explosive lawsuit, filed in San Francisco federal court on January 23, 2025, represents the second major legal action against the blockchain platform this month and threatens to unravel what investors believed was a promising Web3 infrastructure project.
Cere Network Lawsuit Details Reveal Systematic Fraud
Plaintiff Vivian Liu, who identifies herself as both a former employee and investor in Cere Network, has filed a comprehensive complaint alleging systematic fraud by company leadership. According to court documents, Liu claims that Jin, along with his brother, wife, and board members, secretly sold over $41 million in Cere tokens immediately after the platform’s public token launch in November 2021. This action directly contradicted Jin’s public promises that early investors and team members would have their tokens locked under a vesting schedule.
The complaint alleges that Jin and his accomplices transferred these substantial funds into personal wallets while using sophisticated internet bots to manipulate trading volumes. These bots, allegedly operated in collaboration with market maker Gotbit—a firm convicted of fraud and market manipulation in June 2024—created artificial trading activity to conceal the massive sell-off. Liu further claims that Jin diverted investor funds originally intended for Cere Network’s operations into shell companies and personal accounts, where he allegedly gambled millions in risky cryptocurrency trades.
Legal Strategy and Damages Sought
Liu’s legal team has structured the complaint to seek $100 million in damages, arguing this amount reflects the scale of the alleged fraud. The lawsuit specifically cites violations of securities laws, breach of fiduciary duty, and fraudulent misrepresentation. Legal experts note that the $100 million figure likely includes both compensatory and punitive damages, designed to punish what the complaint describes as “egregious misconduct” and to deter similar behavior in the cryptocurrency industry.
Second Lawsuit Compounds Cere Network’s Legal Troubles
This latest complaint follows another significant lawsuit filed just ten days earlier on January 13, 2025. In that Delaware Court of Chancery case, Cere Network co-founder Kenzi Wang accused Jin of systematically misappropriating over $58 million of corporate assets. Wang’s complaint details similar allegations, claiming Jin concealed the scheme through fraudulent accounting, sham entities, and cryptocurrency wash trading.
Wang specifically alleges that Jin caused approximately $41.78 million worth of Cere tokens to be transferred from the company’s treasury to personal accounts on major cryptocurrency exchanges HTX and KuCoin. Additionally, Wang claims Jin provided “grossly falsified financial statements to shareholders and advisors” while understating fundraising amounts by over $21 million. These parallel allegations from two separate plaintiffs significantly strengthen the overall case against Jin and the Cere Network board.
Comparative Analysis of Both Complaints
| Plaintiff | Court | Alleged Amount | Key Allegations | Date Filed |
|---|---|---|---|---|
| Vivian Liu | San Francisco Federal | $100M damages sought | Pump-and-dump scheme, bot manipulation | January 23, 2025 |
| Kenzi Wang | Delaware Chancery | $58M misappropriated | Sham entities, fraudulent accounting | January 13, 2025 |
Token Performance and Investor Impact Analysis
The Cere Network (CERE) token has experienced catastrophic decline since its November 2021 launch. According to CoinGecko data, CERE currently trades for a fraction of a cent, representing a devastating 99.9% decline from its all-time high of 47 cents. This dramatic collapse aligns precisely with the timeline described in both lawsuits, where massive insider selling allegedly occurred immediately after the token launch.
Investors who participated in the 2021 token sale have suffered significant losses, with many reporting complete erosion of their investment value. The lawsuits suggest this outcome resulted not from market conditions but from deliberate actions by company insiders. This case highlights several critical issues in cryptocurrency investing:
- Transparency Deficits: Limited visibility into token allocations and insider selling
- Governance Failures: Board oversight appears insufficient to prevent alleged misconduct
- Market Manipulation Risks: Sophisticated bots can create false trading signals
- Regulatory Gaps: Current frameworks struggle to address cross-jurisdictional crypto fraud
Broader Implications for Cryptocurrency Infrastructure Projects
The Cere Network case represents more than just another cryptocurrency lawsuit. As an infrastructure platform designed to enable decentralized data solutions for enterprises, Cere positioned itself as a serious blockchain project with legitimate use cases. The allegations therefore strike at the credibility of the entire Web3 infrastructure sector, potentially affecting investor confidence in similar projects.
Industry analysts note several concerning patterns emerging from this case:
First, the alleged use of sophisticated trading bots to conceal insider selling represents an evolution in cryptocurrency market manipulation techniques. Second, the involvement of a convicted market maker suggests potential coordination between different bad actors in the ecosystem. Third, the scale of the alleged fraud—potentially exceeding $100 million in combined damages—indicates that even seemingly legitimate projects can harbor significant misconduct.
Regulatory Response and Industry Reaction
Regulatory bodies have increasingly focused on cryptocurrency market manipulation in recent years. The Securities and Exchange Commission (SEC) has brought multiple cases against projects for similar pump-and-dump schemes, though the Cere Network case represents one of the largest alleged frauds in the infrastructure sector. Legal experts predict this case could accelerate regulatory scrutiny of:
- Token vesting schedules and lock-up periods
- Market maker relationships and trading practices
- Corporate governance in decentralized organizations
- Financial reporting standards for crypto projects
Historical Context and Similar Cases
The Cere Network allegations follow a pattern seen in several high-profile cryptocurrency cases. Most notably, the 2023 conviction of the founders of a different blockchain project for operating a $25 million pump-and-dump scheme established legal precedents for prosecuting similar conduct. However, the Cere Network case distinguishes itself through several factors:
The involvement of multiple plaintiffs with insider knowledge strengthens the evidentiary basis. The coordination between alleged bad actors across different entities (Cere Network, Gotbit, shell companies) suggests a more sophisticated operation. The substantial amount involved—potentially exceeding $100 million in damages—places this among the largest alleged cryptocurrency frauds to reach litigation.
Conclusion
The Cere Network lawsuit represents a critical moment for cryptocurrency regulation and investor protection. With devastating allegations of a $100 million pump-and-dump scheme, this case highlights persistent vulnerabilities in the digital asset ecosystem. As both federal and state courts examine these serious fraud allegations, the outcome will likely influence how future cryptocurrency projects structure their token sales, governance, and transparency practices. For investors, this case underscores the importance of thorough due diligence and the ongoing need for robust regulatory frameworks in the rapidly evolving cryptocurrency landscape.
FAQs
Q1: What is the main allegation in the Cere Network lawsuit?
The primary allegation is that co-founder Fred Jin and the board orchestrated a pump-and-dump scheme, secretly selling over $41 million in tokens while using trading bots to manipulate volumes and conceal their actions.
Q2: How much are plaintiffs seeking in damages?
Plaintiff Vivian Liu is seeking $100 million in damages, while co-founder Kenzi Wang alleges $58 million in misappropriated corporate assets in a separate lawsuit.
Q3: What happened to the Cere token price?
The CERE token has declined 99.9% from its November 2021 peak of 47 cents to a fraction of a cent, coinciding with the alleged insider selling described in the lawsuits.
Q4: How does this case affect other cryptocurrency projects?
This case may increase regulatory scrutiny of token vesting schedules, market maker relationships, and corporate governance across the cryptocurrency industry, potentially leading to stricter standards.
Q5: What are the next legal steps in this case?
The defendants must file responses to the complaints, after which discovery will begin. The cases may proceed separately or potentially be consolidated, with hearings expected throughout 2025.
