Chinese journalist Colin Wu released an investigation into PlusToken, one of the largest cryptocurrency Ponzi schemes in history. His report claims that Chinese authorities have confiscated significant digital assets linked to the scheme.
According to the journalist, a team led by a man from Changsha, Hunan, collected 310,000 Bitcoin (BTC), 9.17 million Ethereum (ETH), and over 51 million EOS using a Ponzi and pyramid scheme. 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, and more than 51 million EOS. 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
Wu notes that some confiscated cryptocurrency was sold through Beijing Zhifan Technology. However, the fate of the remaining assets remains unclear.
Wu and Jiang Zhuoer, another source, claim that most confiscated BTC were sold between late 2019 and mid-2020 when BTC prices ranged from $7,000 to $12,000.
Overseas analysts tracking PlusToken addresses believe that while most Bitcoins have been sold through Huobi, around 15,000 BTC might still be unsold. They also assume that the Ethereum addresses remain unchanged.
Wu highlighted discrepancies between the addresses identified by police and those recorded by foreign observers. Police continue tracing some addresses.
What is known about PlusToken
In 2019, PlusToken investors lost $3 billion after the project leaders vanished with their funds. Launched in 2018 by a team from South Korea, PlusToken targeted Asian and European markets.
Investors were promised monthly payments from 6% to 19% and bonuses for recruiting new members. The company aimed for 10 million users by 2019 but stated they had 3 million participants.
Investigation
In March 2019, Hunan police began investigating PlusToken. The head of the Chinese division, Chen Bo, and five others fled.
Primitive Ventures Managing Partner Dovey Wan reported that Chinese police apprehended key suspects several months after PlusToken was suspended.
Audit firm Peckshield reported that around 1,000 BTC began flowing to Bittrex and Huobi in early July 2019.
Rumors suggested someone linked to PlusToken was leaking 100 BTC daily to Binance.
In July 2020, Chinese police detained 27 main suspects and 82 participants in the PlusToken scheme.
Wan confirmed the arrest of PlusToken organizers who had been on the run for a year. The lengthy search was due to key participants dispersing to various countries.
First sales of confiscated assets
In November 2020, Chinese authorities seized $4.2 billion worth of cryptocurrency from PlusToken. The government plans to sell it and invest the proceeds in the state treasury.
Authorities seized 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 leading force in the cryptocurrency industry. It was a major player in mining and produced significant portions of mining equipment.
However, in 2021, the People’s Bank of China declared all cryptocurrency-related activities illegal.
Crypto exchange websites and related resources were banned. The regulator stated that stablecoins like Tether, Bitcoin, and Ethereum are not fiat currencies.
Despite this, mainland China’s share in the global hashrate is 21.11%, just 10% less than June 2021 figures.
Leading mining equipment manufacturers such as Bitmain, MicroBT, and others remain based in China. Despite current bans, China continues to be a critical player in cryptocurrencies, albeit covertly.
