Alleged Bitcoin Ponzi scheme Plus Token could be liquidating billions of dollars in stolen crypto, says VC

Cover art/illustration via CryptoSlate

Allegedly collapsed China-based Ponzi scheme Plus Token may be liquidating on exchanges portions of a reported $3.5 billion cache of stolen cryptocurrency, according to venture capitalist Dovey Wan, who is now appealing to the crypto ecosystem to spread awareness of the “critical” matter “before it’s too late”.

Wan, a CoinDesk contributor known for her inside knowledge of the Chinese market, reported the claim Thursday in a tweet. If accurate, Wan’s revelation would shed light on the recent sell-pressure that has seen BTC lose thousands of dollars in days and descend below the bull’s psychological bedrock level of $10,000.

According to Wan, Plus Token still has control over the vast sum of cryptocurrency and has been disbursing parts of it to exchanges including Huobi, Bittrex and Binance, and attempting to launder the remainder of the coins by splitting the sum between a number of wallets not knowingly associated with the company. She believes the sell-off began in early July.

A brief history of Plus Token

Plus Token debuted in June 2018 with a profit-sharing cryptocurrency wallet reportedly entitling users to monthly interest of 6-18 percent on all deposited cryptocurrency, citing many of the unproven claims and extravagant marketing tactics associated with the now-defunct Ponzi scheme BitConnect, including bot-based trading and arbitrage—to generate profits.

On June 27th, 2019, a number of Plus Token Wallet users centered in China, South Korea, and Japan, according to various reports, began to state being unable to withdraw their assets from the mobile-based crypto wallet.

The news did little to develop further than widespread allegation the Plus Token team had run off with as much as $3 billion worth of user funds and did not trigger the media frenzy expected of such an outlandish event.

Little-known, China arrests core Plus Token team

Yet just days after the first reports of faltering withdrawals emerged, June 29th, a perhaps deliberately opaque piece by the South China Morning Post revealed that six Chinese nationals were arrested in Vanuatu by Chinese law enforcement for operating an unnamed “internet scam” from the Pacific island. The article did not disclose further details.

Later, Alibaba-backed Chinese tech news site 36KR would reveal that the six apprehended in Vanuatu were none other than the founding members of the Plus Token team, and that a “person close to the police” put the total amount of crypto misappropriated through the scheme at 20 billion Chinese Yuan (approximately $2.85 billion).

Wan’s estimates, however, may indicate a significantly larger figure if correct. Having reported that up to 200,000 BTC and 800,000 ETH has been traced back to Plus Wallet addresses, Wan would put the total amount of funds “scammed” by Plus Token close to $3.5 billion.

Why aren’t exchanges on alert?

Though little-reported, the scandal has an immense scope and could come to be realized as the largest exit scam in the history of cryptocurrency.

Cryptocurrency exchanges may be unaware of the apparent scam, according to Wan, who said Chinese authorities had not publicized the information due to red tape:

If indeed exchanges are not aware of such a colossally illicit operation, the saga could unfold into another Mt.Gox-style blow to sentiment in the crypto ecosystem as the remaining members of the Plus Token team cash out their holdings in what would invariably be the single-biggest liquidation of stolen funds to date.

CryptoSlate has reached out to Wan for further comment.

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