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Chinese journalist Colin Wu has conducted an in-depth investigation into PlusToken, one of the largest cryptocurrency Ponzi schemes in history.
What is Known About PlusToken
The Chinese authorities have confiscated a large number of digital assets. The PlusToken team, led by a man from Changsha with only a middle school education, raised 310,000 Bitcoin, 9.17 million Ethereum (ETH), and over 51 million EOS using a Ponzi scheme and pyramid scheme model. Chinese police confiscated 190,000 BTC, 830,000 ETH, and 27.24 million EOS.
“A man from Changsha, Hunan, with only a middle school education, raised 310,000 bitcoins; 9.17 million ethers; more than 51 million EOS, etc. Its model was a straightforward Ponzi scheme + pyramid scheme, raising funds and promising interest, with development of both upstream and downstream lines.” – Colin Wu, journalist
According to Wu, some confiscated cryptocurrency was sold through Beijing Zhifan Technology. However, the fate of the remaining assets remains unclear.
Wu and another source, Jiang Zhuoer, claim that most confiscated BTC were sold between late 2019 and mid-2020 when BTC prices fluctuated between $7,000 and $12,000. Overseas analysts tracking PlusToken addresses believe that while most Bitcoins have been sold through the Huobi platform, about 15,000 BTC may still need to be sold. Additionally, they assume that the Ethereum addresses have not been changed.
The journalist noted that there might be a discrepancy between the addresses identified by the police and those recorded by foreign observers. Police are still tracing some addresses.
PlusToken Background
In 2019, users of the PlusToken cryptocurrency wallet lost $3 billion after the project leaders fled with their funds. The platform was launched in 2018 and promoted as a decentralized international project developed by a team from South Korea. PlusToken targeted Asian and European countries.
PlusToken investors were offered guaranteed monthly payments from 6% to 19% and bonuses for attracting new participants. The company planned to register 10 million users by the end of 2019, although the stated number of participants was 3 million people.
Investigation
In March 2019, police in the southern province of Hunan initiated an investigation into the PlusToken Ponzi scheme. Since then, the head of the Chinese division, Chen Bo, and five other Chinese citizens associated with the project have been on the run. Several months after the platform was suspended, key suspects in the PlusToken case were apprehended.
In July 2020, Chinese police detained 27 main suspects and 82 key participants in the PlusToken cryptocurrency pyramid scheme. The lengthy search was due to the key participants dispersing to different countries, complicating the search efforts.
First Sales of Confiscated Assets
In November 2020, it became known that Chinese authorities had seized $4.2 billion worth of cryptocurrency from the PlusToken financial pyramid. The government plans to sell it and send the profits to the state treasury. At that time, it was reported that the government seized the following coins: 195,000 BTC, 833,000 ETH, 1.4 million LTC, 27.6 million EOS, 74,000 DASH, 487 million XRP, 6 billion DOGE, 80,000 BCH, and 214,000 USDT.
Cryptocurrency Landscape in China
China has long been a major player in the cryptocurrency industry. It significantly contributed to the total hashrate of leading coin networks and established mass production of mining equipment. However, everything changed in 2021 when the People’s Bank of China declared any cryptocurrency-related activity illegal.
The websites of crypto exchanges and many internet resources dedicated to cryptocurrencies were banned. The regulator clarified that stablecoins from Tether, Bitcoin, and Ethereum are not fiat currencies. In 2017, Chinese officials banned ICOs, explaining that companies conducting ICOs might violate financial regulations.
Despite the complete ban on cryptocurrency mining, current data from CCAF experts show that the share of mainland China in the world hashrate is 21.11%, only 10% less than the June 2021 figures. The largest companies producing mining equipment, including Bitmain, MicroBT, and Innosilicon, are located in China.
Thus, despite the current bans, China remains one of the most critical players in the cryptocurrency industry, albeit under the radar.
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