The Phoenix Crypto Project has been at the center of a controversy as Daniel Ianello, the man accused of orchestrating a multimillion-dollar exit scam involving the project, has filed a motion to dismiss the lawsuit brought against him in a Tennessee federal court. Investors have alleged that Ianello took control of the project in October 2022 and executed an abrupt exit, shutting down key infrastructure and transferring large sums of investor funds.
According to court filings, Ianello halted Phoenix’s smart contracts, deleted posts from Discord, erased past versions of the project’s website, and informed the community that the contracts would not be restored. Plaintiffs in the case claim they were left with heavy financial losses after Ianello “moved hundreds of thousands of dollars” in funds. They argue that the actions amounted to a calculated effort to dismantle the project and walk away with the remaining capital.
In his motion to dismiss, Ianello argued that the court has no jurisdiction over him, stating, “This court does not have personal jurisdiction over Mr. Ianello. Mr. Ianello is domiciled in the state of Michigan.” He denied having purposeful contact with the state of Tennessee and claimed that he had never sold securities or made investment offers related to Phoenix. He further stated that he joined the company only after any alleged sales occurred.
The Phoenix project had promised to use pooled community capital to access exclusive investment opportunities, distributing profits back to tokenholders. It also advertised an in-house incubation model for launching and managing new ventures. Investors say these promises were never fulfilled.
For investors involved in the Phoenix case, the fear now is that if Ianello’s motion is successful, remaining funds could be lost to liquidation or fire-sale pricing. Some worry that more lawsuits could follow, further eroding what little might be recovered.
In the wider context of the cryptocurrency industry, the first half of 2025 has already seen over $2.47 billion lost to crypto hacks, scams, and exploits, surpassing the $2.4 billion stolen in all of 2024. While the second quarter recorded a decline in hacking incidents, the damage remains widespread, with phishing scams accounting for over $410 million across 132 incidents. Ethereum remained the most targeted chain, with code vulnerabilities emerging as the top threat.
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