[Due Diligence] Is Pi Network a scam?

Have you heard of the Pi Network?

This is an application for smartphones that allows you to mine a crypto currency called Pi completely free & power-saving.

There are many different types of mining applications, each issuing their own tokens. Today, I will be reporting on Pi Network, the oldest of them all, with a risk-focused eye of due diligence.

Since this is an in-depth investigation, I will be taking a slightly harsher look at it today. I apologize if my tone is scary.

I don’t solicit for personal gain or encourage people to buy.

Conclusion – Scam or Not

Scam happens even when it’s not scam

I looked into it, and from a corporate research standpoint, it did not appear to be a scam.

The business model itself is different from pyramid schemes, Ponzi schemes, or network businesses, but if there is a possibility of damage, it can be divided into “crimes by the operator” or “crimes by a third party.

For example, if a developer misuses personal information provided for KYC purposes, it is the former; if a development team or third party maliciously joins the Pi Network and removes currency from a user’s wallet, it is the latter.

This investigation was only a due diligence on the management side. As far as I have investigated the developer company, SocialChain Inc. I have determined that the risk is low.

I rarely see comments that the KYC pass/fail criteria is too strict and collects too much information, but I thought it was reasonable as a background check for a money-related service provided across the country.

Why does scam occur in Pi?

As for “third-party crimes,” I have seen several reports of fraudulent activity at this point.

Phishing scams that demand recovery phrases by third parties unrelated to Pi Network, or directing users to fake websites that impersonate exchanges, wallets, or credit card companies, are typical fraudulent activities.

The fact that Pi Network has only been in service for a short time and the large number of users of the application are factors that may have contributed to the occurrence of fraud, but I believe the root causes are the following three points.

  1. Hard to get a grasp of the actual development teams participating in the network
  2. Ecosystem remains a closed environment within the community
  3. Many participants have limited knowledge of blockchain technology and culture

Let me explain step by step.

The problem (1) is difficult to access data about individuals and companies providing services on the Pi Network. Information on the teams that participated in the hackathon can be quickly viewed on the Pi Browser, but it is difficult to follow the details of newly launched projects, and it is difficult to understand unless you can read the corresponding language of the application. It is also difficult to ensure objectivity because you will be using a proprietary browser that few people use.

Although (2) is in its infancy, it is still difficult to see its social position because there are few official announcements that are aware of the outside world, such as what companies are involved with Pi Network, whether partnerships have been formed between platformers, how they comply with regulations, and the status of their funding.

(3) is a problem that is occurring because of the rapid increase in the number of app users. The current environment, where users who do not have the correct knowledge or are not familiar with the crypto culture can easily make misjudgments because of it, needs to be improved.

These seem to be the factors that lead to rampant fraud. It is easy for unrelated individuals and companies that might be associated with Pi Network to develop malicious services, and it fosters an environment where it is easy to trick those who are not familiar with blockchain into taking their money.

I feel that for the situation to improve, there needs to be transparency, with easy access to developer information that maintains objectivity, social status reports from officials, and education related to Pi available to everyone in their native language.

Beware of unofficial info!

Do not trust anything other than official announcements, even if it is just a little thing.

For example, this image called Pi Coin Holder Ranking that was previously circulated in the community.

This is an image appropriated from the Bitcoin Holder Ranking, and only by juxtaposing the two do people who have not been investing in crypto currencies for a long time realize that this image was a parody. It is fine for the community to have a good time, but the carelessness of almost believing that these numbers are true will definitely cloud your investment judgment.

Whenever you follow a social networking account, always do so from an official website or a trusted link.

When you jump to the official website, always use the link of the official SNS account.

To check if it is really an official social networking account, be sure to check its followers as well. Are there any trusted followers there? Are the followers genuine?

Be careful about the news reports. Is the news site you are looking at now a blog written by an individual? When is the news? Bookmarking is a must.

Ignore emails you don’t know about. Leave the asset that has been in your wallet for some time. Any talk of money to be gained by paying is a lie. The Giveaway may be a decoy to find a convenient sucker.

This is a long story, but I will tell you about the survey report next.

Corporate Research & Analysis

Dr. Nicolas and Dr. Chengdiao

Dr. Nicolas Kokkalis
Dr. Chengdiao Fan

Pi Network is a blockchain network developed by Dr. Nicolas Kokkalis of Stanford University.

His developer and entrepreneurial background includes the development of Gameyola, an online game distribution and monetization platform, and his role as founding CTO of StartX, a non-profit organization that supports student startups at the University.

Dr. Nicolas also has a research career that includes four years at the University of Crete, Greece, three years at the Institute of Computer Science – Foundation for Research & Technology – Hellas (ICS-FORTH), also in Greece, and two years as a research assistant at the University of Toronto, Canada. (See: LinkedIn)

Dr. Nicolas currently leads the Pi Network development team and teaches Stanford University’s first distributed applications class once a year.

Dr. Chengdiao Fan holds a PhD in Computational Anthropology from Stanford University, is the founder and CEO of SocialChain Inc, the developer of Pi Network, and, like Dr. Nicolas, is both a developer (software design) and entrepreneur.

Pi Network was not the first time Dr. Nicolas and Dr. Chengdiao collaborated on a project; you can see their names among the members of the startup MyriadHub Inc. founded in 2017. (See: OpenCorporates / ACM Digital Library)

The following words from their profile on the official Pi Network website indicate MyriadHub. “for my later PhD work, I tried to restore those man years by writing a crowd-powered email assistant that saved people time when processing their emails and tasks.”, “I also founded a startup that builds an email productivity platform that scales conversations by crowdsourcing.”

SocialChain Inc.

The company developing Pi Network is SocialChain Inc. and its parent company is Pi Community Company.

“SocialChain, Inc., its parent and affiliates (“SocialChain”) provides a platform for managing crypto currency and crypto assets, for mining the cryptocurrency Pi, for enabling individual users to contribute to the security and community of Pi Network, and for allowing ordinary websites and applications to interact with blockchains to build a blockchain ecosystem.”

SocialChain was founded on September 11, 2018 and is headquartered in Palo Alto, California (registered office in Delaware). The founder and CEO is Dr. Chengdiao Fan. (See: OpenCorporates)

FYI: In the U.S., some states require a minimum capitalization of about $1,000, but most states do not have a minimum capitalization requirement, so being a corporation is not proof of holding capital.

The company has approximately 220 employees, including part-timers, distributed around the world. Each employee has a wide variety of majors and responsibilities. (See: LinkedIn)

Sorry, I don’t have english picture…

However, personnel treated as employees on LinkedIn may include moderators and other community members. Also, I could not find any reference to the compensation structure for the job.

Currently, they are looking for community administrators and content managers who can work remotely. The fact that the job requirements include fluency in a language other than English is indicative of SocialChain’s international activities, as well as the fact that it has moved from the initial development phase to the phase of broadening the service’s reach.

From 2020 to 2021, the total number of employees appears to be rising steadily.

Although probably not an exact figure, the graph below from the MA tool Apollo also shows that the total number of SocialChain employees is gradually increasing between 2020 and 2022. (See: Apollo)

The graph shows a particularly large percentage increase in the number of “Other” in each department. Is this a situation where the number of full-time employees has remained almost the same and the number of community members, such as app developers operating on the network, continues to increase?

Here is a graph with “Other” hidden.

The fact that I adding engineers at the end of 2020 and personnel related to business development and product management at the end of 2021 gives an air of a project that is stepping up.

In summary, SocialChain is a growing global company born out of a small community of Stanford professors and students and backed by the university’s long-standing and proven startup support. Pi Network is their biggest hit.

Memo: OpenCorporates, the company that referenced the database, was founded in London on December 20, 2010, and operates a website for sharing company information.

It was appointed in early 2012 to the Advisory Committee on LEI: Legal Entity Identifier for Financial Contracts of the Financial Stability Board (FSB), based in Basel, Switzerland. Other awards include the Open Data Business Award from the nonprofit Open Data Institute in July 2015. OpenCorporates is a trusted secondary database provider. The fact that the company is followed on Twitter by GLEIF (Global Legal Entity Identifier Foundation) and Level39 shows the depth of its relationship with fintech.

Analysis Tools “Pi Testnet Dashboard”

Although it is very risky to trust any information other than what is officially transmitted by the Pi Network, this data analysis tool, although unofficial, seemed to be useful, so I introduce it here.


This dashboard collects data from Pi Network’s test nets and quantifies and graphs it. I thought that by looking directly at the on-chain data, it would be easier to understand the current situation and analyze the risks correctly. However, this is just a reference since Pi Network’s main net opened on June 28, 2022.

In order to determine the correctness of the data, I followed the link to confirm the identity of the developer, who appears to be the CTO of an IT company called Symper in Hanoi, Vietnam. All of his Blogger posts were about blockchain, and all were knowledgeable articles. I was suspicious that the dates were consistent with May 8, 2022, but the next day, May 9, he posted on Facebook that he had republished a compilation of his past articles.

The developer, Nguyễn Việt Dinh, is not a pioneer (a common name for Pi miners), it says on the dashboard. It seems to be a purely analytical tool.

First, look at the numbers in the box at the top of the page.

The “TOTAL SUPPLY” number is roughly in line with the 100 billion listed in the December 2021 white paper.” The “Accounts” number is less than the officially announced 35 million users. The number is not decreasing, but it is probably best to take it as somewhat of a number. All the numbers fluctuate each time the screen is refreshed. By the way, all the screenshots I’m going to post here were taken on July 11, 2022.

Memo: Pi Network’s white papers can be found in the Pi app under “Hamburger Menu” -> “Mainnet” -> “New White Paper Chapters” in the upper left corner of the main screen. The December 2021 edition contains more information on Tokenomics. Please read it:)

Next, look at the number of active nodes in each country.


I had a feeling from looking at the community, but China still has the largest number.

Then, Vietnam. Consistent with the statement “The Pi Coin has become popular in Vietnam” in the news article “Artworks reveal artistic flair of Pi Network supporters” on the London exchange Currency.com. Vietnam also made up a high percentage of the nationalities of employees listed on SocialChain’s LinkedIn.

As expected, South Korea, an altcoin powerhouse, also comes in line. Japan had fewer than expected.

FYI: Currency.com is an exchange that offers STOs. In addition to crypto currencies, they also offer stocks, indices, commodities (oil and precious metals), and FX in parallel. For those who usually use exchanges that deal only with crypto currencies, this is a new experience for you!


The node distribution map shows that the nodes are most used in Asia.

Although the volume is unevenly distributed between Asia, the EU, the U.S., and the rest of the world, there are nodes in countries that have been key to the development of crypto, such as India, Saudi Arabia, the Seychelles, Nigeria, South Africa, Brazil, Uruguay, Australia, and New Zealand. Decentralization may be well underway.

PiTestnetDashboard_Top 10 Richest PI Accounts

I did not understand how to see the list of top 10 holdings ranking.

It looks like the Pi of the account with the most holdings is the total that will now be distributed to the community (80%) and the Core team (20%). I looked at the addresses of the mining compensation (65%), liquidity pool (10%), and foundation reserves (5%), each of which was mentioned in the white paper, in Pi Testnet Explorer, but not in that ratio. Transactions seem to have been recorded after the mainnet migration on June 28, hmm?

Risk of reduced number of users due to regulation

Finally, let us consider risk from a slightly different perspective.

The Pi Network project is underway with plans to list on a crypto currency exchange in the future.

Presumably, once Pi is deemed sufficiently decentralized, it will move to the open net and be tied to the utility-based real economy, but it will also run head-on into regulation.

There is no guarantee that a situation will not arise where Pi cannot be converted into another crypto currency or Fiat in a country where cryptos are strongly regulated or considered dangerous by economic powers. Even DEX, which can be used without KYC/KYB, in most cases, stops providing services to users in certain regions. As an example, I will post the terms of service of StellarX and Unizen.


“It is prohibited to access or use the Services in the following jurisdictions: Cuba, Iran, North Korea, Sudan, Syria, Crimea region of Russia. This list may be modified from time to time, in StellarX’s sole discretion.”


As stated in the terms and conditions, these restrictions can be changed by the platform on its own authority.

If a change in the terms and conditions results in a region where Pi cannot be converted to legal tender, I doubt that users in that region will continue to participate in the Pi Network. I do not know how much of an impact the reduction in regulated users will have, but it may be worth worrying about in the long run as a source of uncertainty.

If only immediately after the open net transition, the impact, if any, should be minimal because the white paper stated that Tokenomics would be reviewed prior to the open net transition.


I started mining Pi Network in the spring of 2021 and set up a node to play with it when there were no rewards yet, but now that I have investigated it, I feel again that it is a terrific project.

If you find it interesting, please give Pi Network mining a try.

The app is fully invitation only, so if you like, you can use the invitation code “TradeFennex”. Fennec (me) will be happy if you use the invitation code, as it will increase the mining speed. Also, I’ll be happy like I got a like from someone who read my blog. I jump up and down. Please take me back to my childhood when I now see everything as a scam.

That’s it for Pi Network’s due diligence from a risk perspective.

Thanks for reading to the end~.