Cryptocurrency News

More than $4 bilion in crypto assets from the PlusToken ponzi scheme have been seized by Chinese police

By November 28, 2020 No Comments

Key highlights:

  • The seizures amount to around 1% of BTC and 0.73% of the ETH circulating supply
  • The first-ever detailed breakdown of all seized assets has been released to the public
  • The scheme affected more than 2 milion people, for more than 50 bilion yuan (over $7.5 billion)
  • The court says that all the assets will “be processed pursuant to laws and the proceeds and gains will be forfeited to the national treasury”

What was PlusToken?

As with most fraudulent crypto investment schemes, PlusToken victims were promised high and consistent returns with minimal to zero risk. The operators of PlusToken said that the returns “earned” by investors were generated through arbitrage trading. In reality, there was no arbitrage trading going on – the returns were generated by distributing investments from new members to old members.

Everything was covered well and the organization seemed to be using the funds for crypto-related product development, like the Plus Token Wallet and Exchange.  On top of that, there was a referral option for all memebers to invite other people to increase gains exponentially.

PlusToken was seemingly functioning well until June 2019, when users started noticing issues with withdrawing their funds. At first, the organization reported problems with mining fees, but it was not long after people started to realise what was going on. The icing on the cake was a transaction with the note “Sorry, we have run”.

Every story has an end

Firstly, in the summer of 2019, Chinese authorities arrested six people in an attempt to shut down the organization. However, the stolen assets kept moving through wallets even after the arrests. This was an obvious sign that there were others involved still at large, and the government took further action to take everyone down.

This time, the police outdid themselves by arresting 27 primary suspects who are thought to be responsible for the scam, as well as another 82 members who were a part of the organization. So far, 15 members have been convicted for 2 to 11 years in prison with fines between $100,000 and $1 million.

Among the seized assets were many cryptocurrencies, mostly involving BTC.

Police also identified more than $20 milion laundered by one of the members. The money was being distributed within the organization and their families, which was more then enough for a high-end lifestyle.

Large amounts of cryptocurrency will be frozen during the investigation. This can cause several issues and unexpected changes with crypto prices, especially with BTC, due to the sheer amount of assets involved in the scheme. It is even believed that the massive BTC crash in March was influenced by the organization moving and cashing in large amounts of BTC.