On Friday, February 20, 2026, Wincent Investment Fund PCC Limited filed a complaint in the US District Court for the Northern District of California against Continue Capital, Xiahong Lin, Particle Trade, and Ring Protocol, alleging a fraudulent cryptocurrency scheme centered around dETH tokens.

The lawsuit claims Lin orchestrated a system using Ring Protocol and Duo Exchange that falsely portrayed the safety and full collateralization of ETH deposits, promising a 1:1 redemption with dETH tokens while secretly maintaining centralized control and the ability to mint unbacked tokens.

The complaint highlights an incident in October 2024, when Lin’s personal wallet was compromised in a phishing attack, leading to a collapse in the price of dETH. Following this event, the defendants purportedly urged users to “buy the dip,” falsely assuring them that dETH was “1:1 backed with ETH” and that buyers “would not lose out.” Wincent Investment Fund states it relied on these assurances when purchasing 711 dETH tokens for approximately $720,000.

The lawsuit further alleges that Lin manipulated the market by unilaterally removing nearly all liquidity from the dETH-ETH trading pool through governance control, effectively eliminating the secondary market and trapping token holders. In March 2025, Lin allegedly minted 18,000 unbacked fwWETH tokens, redeemed them for user-deposited ETH, and then used that ETH to mint an additional 10,000 dETH tokens, breaking the purported 1:1 peg.

According to blockchain records cited in the complaint, there is an approximate 42,000 ETH shortfall between outstanding token claims and actual backing, with only 0.65 WETH remaining to back over $124 million in circulating tokens.

Wincent Investment Fund’s complaint includes seven causes of action: fraudulent inducement, common law fraud, breach of contract, breach of implied covenant of good faith and fair dealing, civil theft under Cal. Penal Code § 496(c), violation of California’s Unfair Competition Law, and violation of California’s False Advertising Law.

The plaintiff is seeking compensatory and punitive damages, treble damages under California Penal Code § 496(c), restitution of $720,000 paid for the dETH tokens, attorney’s fees, and injunctive relief. The complaint asserts that the defendants systematically misappropriated user funds while making false representations about decentralization and full collateralization.