A group of investors filed a $100 million lawsuit on Tuesday in a US federal court against executives of the San Francisco blockchain data project Cere Network. The complaint accuses insiders of fraud, racketeering, and orchestrating a token dump after the 2021 launch. According to the plaintiffs, the business prospects, token restrictions, and customer traction of the project were being misled by Cere Network and its CEO, Fred Jin. The founder of Cere was identified as the perpetrator in the lawsuit. However, there were many other defendants as well. Cere Network faked promises and investor roles In the court filing, the plaintiffs claimed the project pitched a vision of a decentralized data storage platform operating within independent servers. Cere presented the system as a solution to the insatiable demand for secure cloud data services, which would also run on a proprietary digital asset, the CERE Token. The complaint says investors were told the token would power payments and governance on the platform. They were also informed that the token would seek listings on exchanges such as Binance , with proceeds from token sales used to fund infrastructure development. One plaintiff, Lujunjin “Vivian” Liu of Cupertino, says she was introduced to Jin and his plans for the data network. Liu was recruited as a senior strategic advisor and told that her compensation would be made in CERE tokens. From 2019 through 2021, Liu says she devoted up to 20 hours per week to the new venture’s fundraising, investor outreach, and token planning ahead of the public sale. She also invested personally and through Goopal Digital Ltd., an affiliated investment firm. Cere raised about $50 million through private and public token sales in November 2021, the complaint states. The project’s investors were told that insider tokens would be subject to lockups to purportedly prevent insiders from selling their holdings and protect CERE’s market stability. But the plaintiffs insist those assurances were false, as insiders began selling large quantities of tokens soon after trading began, causing a steep price slump. CERE made a market debut at $0.45 but fell to around $0.06 after weeks of trading. As of Thursday, it was trading near $0.0003384, down more than 99% from its all-time high. While employees and outside investors were subject to lockups, the complaint says Jin and associates were not bound in practice. They allegedly sold more than $41 million in tokens on public exchanges shortly after launch and transferred the proceeds into personal cryptocurrency wallets. Goopal and Liu also allege that millions of dollars raised for Cere were moved into shell entities and accounts linked to Jin and partners. Moreover, the plaintiffs argue that Jin used automated bots from Gotbit Ltd. to engage in wash trading. The US Department of Justice convicted Gotbit’s founder of wire fraud and market manipulation in June last year, Cryptopolitan reported . Liu and Goopal are seeking $25 million in compensatory damages and $75 million in punitive damages. Cere Network CEO is facing another lawsuit and internal control allegations The federal case comes against the backdrop of another law charge filed two weeks earlier in Delaware. Cerebellum Networks co-founder Ken Wang filed suit in the Court of Chancery against the same defendants, claiming they diverted about $58 million in Cere token assets. Cerebellum was established in January 2019 after raising approximately $42.9 million from private investors and token sales between 2019 and 2021. The funds were intended to build and operate the Cere Network platform. Wang alleges that “secret token dumps” began immediately after the November 8, 2021, ICO. He claims roughly $41.78 million in tokens moved from the company treasury to exchanges. These tokens were sold through accounts controlled by Jin and others, despite their claims that project-allocated tokens were “locked.” The Delaware complaint also indicates that at least $16.6 million was stolen from a Regulation D fundraising wallet. The money, allegedly from Republic’s US investors, was sent to two unknown personal wallets. They were used for crypto trading, resulting in losses of about $9.78 million. Jin is alleged to have gained control of more than 86% of the financial documents as he tricked shareholders and advisors with misleading financial information. This included fake financial reports, understated fundraising amounts, and misrepresentations of multi-signature wallet information. Claim your free seat in an exclusive crypto trading community - limited to 1,000 members.
