A recent report by Chainalysis claims that the PlusToken Ponzi scheme may be responsible for the recent BTC price plunge. According to the report, about 45,000 BTC worth around $302 million were sent from crypto wallets owned by PlusToken to the individual wallets of the scammers. Additionally, the scammers sent about 800,000 ETH worth around $102 million to their crypto wallet addresses.
In the report, Chainalysis notes there is still about 20,000 BTC worth around $134 million that could soon be dumped in the crypto market. The report concludes that based on recent price movements, the massive dumping of BTC could be causing the price to fall.
The PlusToken Ponzi scheme
Like many other crypto Ponzi schemes, the scammers tricked investors by promising them huge returns. Buyers only needed to purchase the PLUS coins using BTC and ETH. After that, buyers were promised huge returns from the company’s various operations.
The Chainalysis report noted that various Chinese exchanges were also duped into listing the PLUS tokens. At some point, the PLUS tokens were worth as much as $350 as investors poured their money into the scam. It is believed that the scammers managed to get 180,000 BTC, 110,000 USDT, 6,400,000 ETH, and 53 OMG from investors. In total, they managed to get around $2 billion from unwitting investors. As part of the scam, PlusToken paid out some of their loot to early investors to maintain the illusion that this was a genuine project.
How they are Cashing Out
The report notes that the scammers are cashing out by laundering most of the loot via OTC crypto brokers. Their main target is OTC brokers with low KYC requirements. It notes that the brokers are selling most of the loot in batches via the Huobi crypto exchange. According to Chainalysis, this mass dumping of the ill-gotten loot is what is causing BTC prices to fall.
The report indicates that thus far, the scammers have cashed 10,000 ETH with about 790,000 ETH still untouched in a single crypto wallet. It also notes that about 25,000 BTC has been cashed out with the remaining loot spread out in over 8,700 crypto addresses. To cover their tracks, the scammers have been using crypto mixers to make it hard to trace the BTC.
What this Means for the Crypto Industry
The report concluded that while there may be other factors causing the huge price swings in BTC, most of the evidence points to this being caused by the TokenPlus exit scam. The authorities have managed to arrest most of the top tier leadership team that perpetrated the scam. As such, it is possible that one person is carrying out these huge crypto transfers.
In general, this puts into perspective the danger that bad actors in the crypto sector pose. This industry is still small and it is incumbent upon everyone to work together to keep scammers at bay. For instance, there needs to be more educational material out there on how potential investors can identify and avoid potential scams, no matter how lucrative they seem.
Bitcoin Price Update
In the last 5 days, Bitcoin price has tanked. The sell-off started occurring around $7,200 levels and did not stop until Bitcoin price hit $6,450 levels. The last 24HR, price has rebounded, as we’ve seen about a +3.5% correction to the upside. With the theory above, it will be interesting to see price activity. If scammers still have a substantial amount of Bitcoin to liquidate, it will be interesting to see where it takes the market.
Image Source: Flickr / Comparitech
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