Plus Token might be the third-largest crypto Ponzi scam in history

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Net Patrol International Inc.  Data Investigation and Forensic Services
Bankruptcy and Insolvency Trustees

(August 23, 2019) – The Plus Token cryptocurrency app has allegedly defrauded customers out of more than US$3 billion using a Ponzi Scam, Cryptoslate reports. If the losses are confirmed, the scheme might be the third largest Crypto Ponzi Scam in history.

Plus Token, a fast-growing mobile app promoted across China, South Korea, and Southeast Asia, officially collapsed on June 27, Chinese media reported. The app promised clients excessive monthly returns between 6 and 18 percent when they exchanged their cryptocurrencies in supposedly interest-generating PlusTokens. However, the app used a multi-level marketing approach to encourage crypto-investors to recruit other people. The new investors had to pay a minimum of US$500 to participate. The newly collected money was then putatively used to pay the returns of the other investors. The classic Ponzi scheme generated a loss for the allegedly scammed investors of about US$3 billion in total. Over $2.1 billion in Bitcoin alone were exchanged through the app.

On June 29, six Chinese individuals were arrested on the island Vanuatu for internet fraud. Chinese sources say, the arrested were leaders of Plus Token and might stay in prison for decades. Even though the six Plus Token leaders are arrested, the fraudulently obtained coins are still out there and accessible by Plus Token.

In August, a Chinese crypto scene specialist and founding partner at Primitive Ventures, Dovey Wan reported huge amounts of coins in wallets related to the scam. The wallets hold more than US$2.15 billion in Bitcoin and $158 million in Ethereum (ETH), as well as an unknown amount of EOS. A security edit from Peckshield reported that the stolen coins are being laundered since July.

Depending on the amount of sold batches related to the crypto scam, the impact on the market could vary. On the one hand, considering the scale of the bogus obtained coins, a sell-off would have a significant impact on the price, especially of Bitcoins. The Bitcoin supply would increase, leading to decreasing prices. On the other hand, it is reported that many of the Bitcoin addresses analyzed in this case were ‘multisig’ (multi-signature), which means that the enclosed coins in these wallets can only be moved if multiple signatures are provided. With six Plus Token leaders incarcerated, a part of the fraudulently acquired coins may be inaccessible for now. This scenario would mean a decrease in Bitcoin supply, leading to an increase in prices.

This kind of fraudulent behavior is unfortunately not uncommon in the crypto area. CipherTrace reported that already in the first quarter of 2019, losses related to crypto scams, fraud, and Ponzi schemes sum up to approximately US$1.2 billion. While in 2018, the total amount of approximately US$1.7 billion was stolen or involved in fraudulent activity. CipherTrace’s latest report from July 2019 states that the fraud-related losses in cryptocurrencies amount to US$4.26 billion so far.