Phoenix FIRE Exit Scam: $800M Crypto Project Faces Investor Fury as CEO Seeks Dismissal

Journalist

Hassan Shittu

Journalist

Hassan Shittu

About Author

Hassan, a Cryptonews.com journalist with 6+ years of experience in Web3 journalism, brings deep knowledge across Crypto, Web3 Gaming, NFTs, and Play-to-Earn sectors. His work has appeared in...

Author Profile

Share

Copied

Last updated: 

July 4, 2025

Why Trust Cryptonews

Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews

Daniel Ianello, the man accused of orchestrating a multimillion-dollar exit scam involving the crypto project Phoenix Community Capital, has filed a motion to dismiss the lawsuit brought against him in a Tennessee federal court.

Investors allege 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.

Phoenix Crypto Project’s Fallout Deepens as Ianello Rejects Court’s Authority

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.

Q2 Crypto Losses Drop, But 2025 Still on Track to Surpass Last Year’s Scam Total

According to blockchain security firm CertiK, the first half of 2025 saw over $2.47 billion lost to crypto hacks, scams, and exploits, already surpassing the $2.4 billion stolen in all of 2024.

While the second quarter recorded a sharp decline in hacking incidents, with 144 cases and $800 million in losses, down 52% from Q1, the damage remains widespread.

Two major cases, involving Bybit and Cetus Protocol, accounted for $1.78 billion of this year’s total losses, significantly skewing the data.

Even without those outliers, the adjusted figure of $690 million still underscores the persistent threat facing investors.

Phishing scams accounted for over $410 million across 132 incidents, making it the second costliest attack vector. Meanwhile, Ethereum remained the most targeted chain, with 175 security events leading to over $1.6 billion in losses.

In May alone, more than $302 million was lost to scams and hacks, with code vulnerabilities emerging as the top threat. That single category accounted for $229.6 million, a 4,483% spike from April’s figures.