A China-based Ponzi fraud (Ponzi scheme) with cryptocurrency could possibly explain the massive series of Bitcoin (BTC) sales of the past few days.
The largest Ponzi scheme in the history of crypto.
On August 14, Dovey Wan, founder of the blockchain-based investment company Primitive Ventures, drew attention to PlusToken on social media, which she claimed to be a Ponzi scheme who is now laundering their “proceeds”.
PlusToken is a reportedly collapsed Ponzi scheme that has generated a reported $3 billion in “stolen cryptocurrency” and which may now be liquidated on various cryptocurrency exchanges.
PlusToken debuted in June 2018 with a “profit-sharing” mobile cryptocurrency wallet, which allegedly gives users the right to a monthly interest of 6-18% on all deposited cryptocurrencies. PlusToken has a classic Ponzi scheme structure consisting of four “membership” layers, each with different discount percentages. At the start of 2019, PlusToken claimed to have more than 10 million members.
Dovey Wan, a CoinDesk employee who is known for her prior knowledge of the Chinese market, reported the claim in a tweet on Wednesday. If the information is accurate, Wan’s revelation could shed light on recent sales pressure, causing Bitcoin (BTC) to lose thousands of dollars for days and fall below the basic psychological level of $10.000.
Wan has substantiated the claim with a considerable amount of information, including all wallet addresses – including Bitcoin (BTC), Ethereum (ETH) and EOS (EOS) – that are known to be associated with PlusToken.
According to Wan, PlusToken still has control over the huge amount of “stolen” cryptocurrency and has split its parts and redirected them to various cryptocurrency exchanges, including Huobi, Bittrex and Binance.
She also made an urgent appeal to all cryptocurrency exchanges and over-the-counter (OTC) platforms, to register the wallet addresses and to blacklist them.
Wan noted that two months ago the Chinese police hunted down an important member of PlusToken and revealed that investors were scammed for as much as $3 billion.
In addition to the wallet addresses, Wan has included research data from security control agency Peckshield, which reveals the flow of money from the PlusToken wallet from the beginning of July, the date on which the massive sales were probably started:
Despite the arrest, the stolen cryptocurrency reportedly cannot be reversed, as Wan explains:
“Many of their BTC addresses were started with P2SH, which is often used for mutil-sig, so some people who hold the keys are not caught, which is why the police cannot unlock the wallet. It may be different for EOS/ETH wallets, but until now the police could not touch them.”
In an effort to limit the impact of the “sell-out”, she recommended that Peckshield and blockchain analysis company Chainalysis do a better analyze of the cash flows, and noted that PlusToken seems to be moving their funds in small batches of 50-100 Bitcoin (BTC) to various crypto exchanges.
Chinese traders have reportedly claimed that an unknown wallet address has continuously dumped 100 Bitcoin (BTC) on cryptocurrency exchange Binance in recent days, which Wan suspects is associated with the Ponzi scheme.
It was already reported on June 27 that a number of PlusToken wallet users based in China, South Korea and Japan were unable to withdraw their funds from their mobile cryptocurrency wallet.
The news has so far developed little further than the widespread and logical claim that the PlusToken team has “run away” with no less than $3 billion in user funds. However, it did not lead to the media frenzy that you would expect from such a bizarre event like this.
On June 29, the South China Morning Post announced that six Chinese suspects were arrested on suspicion of internet fraud. After investigation it appears that all six suspects are leading members of the PlusToken team.
Although little has been reported, the PlusToken Ponzi scheme fraud scandal has a huge scope and can be seen as the largest “exit scam” or Ponzi scheme yet in the history of cryptocurrency.
According to Wan, a large number of cryptocurrency exchanges may not be aware of the apparent scam, which indicated that the Chinese authorities did not publish the information due to red tape: