The Victory were reportedly offered $200,000 plus 50% of any on-sale of the 24-year-old but rejected the approach without entering into any negotiations.
The former Brisbane Roar man is said to be bitterly disappointed with the club's decision after making it clear he saw a switch to one of Asia's top leagues as a significant step in his career, and also a chance to push for a more permanent Socceroos place.
Nichols, who has been a key part of Victory's impressive A-League season thus far, is seven months into a two-year deal at AAMI Park with his current situation reminiscent of Mark Milligan's attempts to join English Premier League side Crystal Palace earlier this year.
Cerezo coach Ranko Popovic confirmed his willingness to bring Nichols to the club and had high praise for the player, who he has kept tabs on since the 2012 Asian Champions League when his FC Tokyo side faced the Roar in the group stages.
"I make no secret that we are trying to attract Mitch to the club and he's a player I admire very highly,'' Popovic told SBS.
"He's a technically good player who will fit into the J-League but, just as important, he has, as many Australian players do, the right mentality,"
"I need to finalise things with Mitch because he's a player I really want, but if we can't work out a way then I need to turn my attention elsewhere because there are a lot of talented players available, particularly in Europe.
"With all respect to football in Australia, this is the next step in Mitch's career and for his future to come to a league like the J-League."