$100M Legal Action Targets Cere Network Leadership Over Alleged Token Sale Fraud
In its second legal battle this month, Cere Network faces allegations that company leadership, including a co-founder, engaged in fraudulent activities connected to the platform's 2021 public token offering.
Leadership at crypto infrastructure provider Cere Network faces allegations in a $100 million legal complaint that accuses the company's co-founder and board members of orchestrating a pump-and-dump operation that defrauded investors of millions.
Filed Tuesday in federal court in San Francisco, the legal action brought by Vivian Liu, who identified herself as both an employee and investor in the firm, alleges that Cere co-founder Fred Jin, along with his sibling, his spouse, and the company's board of directors, misappropriated $41 million from those who backed the venture.
The legal filing states that Jin made assurances prior to the platform's public token offering in November 2021 that both he and early backers would be restricted from liquidating their tokens, which were scheduled to become available for sale several months down the line.
While certain employees and investors had their Cere Tokens 'locked' under the vesting schedule, Jin and his accomplices secretly sold over $41 million in Cere Tokens on various crypto exchanges and transferred these funds into their personal wallets immediately after the tokens went 'live,'
the complaint alleged
This legal filing represents the second case brought against Cere Network within the current month, following a separate lawsuit filed by Cere co-founder Kenzi Wang against Jin and the board in Delaware on Jan. 13, which made similar allegations of fraudulent behavior.
Cointelegraph contacted Cere Network and Jin for comment.
Latest complaint seeks $100 million in damages
The lawsuit brought by Liu alleges that Jin misappropriated investor capital "originally slated for Cere Network's operations" and funneled the funds into shell entities and financial accounts under his control and that of his purported co-conspirators, while wagering millions through "risky crypto trades."
Liu further alleged that Jin collaborated with Gotbit, a market making firm found guilty of fraud and market manipulation in June, to deploy "sophisticated internet 'bots'" that artificially inflated the token's trading volumes "to conceal the fraud."
In her argument to the court, Liu stated she was entitled to $100 million in damages, "commensurate with the sheer scale and size of the fraud."
Cere co-founder Kenzi wang claims $58 million misappropriated
In early January, Wang, who co-founded Cere, filed accusations against Jin in Delaware's Court of Chancery, alleging a coordinated effort to "systematically misappropriate over $58 million" of corporate assets belonging to the company.
According to Wang's allegations, Jin hid the fraudulent scheme "through fraudulent accounting, sham entities, and cryptocurrency 'wash trading'" and was responsible for causing "approximately $41.78 million worth of Cere Tokens" to be moved from the company's treasury into private accounts on cryptocurrency trading platforms HTX and Kucoin.
Wang additionally accused Jin of providing "grossly falsified financial statements to shareholders and advisors" while misrepresenting fundraising totals by more than $21 million.
The Cere Network (CERE) token is currently trading for a fraction of a cent, down 99.9% from its peak of 47 cents in November 2021, according to CoinGecko.