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PlusToken: A Ponzi Scheme

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Written by   19
1 year ago

Plus Token

Plus Token was a high-yield investment platform disguised as a cryptocurrency Ponzi scheme. The platform's administrators shut down the service in June of this 2019. The scammers abandoned it by withdrawing over $3 billion in cryptocurrencies (Bitcoin, Ethereum, and EOS) and leaving the message "sorry we have run." This has resulted in an international manhunt for Plus Token's site administrators and developers. Since stolen funds were sold via Bitcoin OTCs, the Plus token has been blamed for causing Bitcoin prices to fall in 2019.

PlusToken had a sizable following in Korea and China, especially among non-cryptocurrency investors. Plus token was a High Yield investment scheme that gave huge incentives to unsuspecting victims in China and Korea in return for their “investment.” The scheme offered monthly returns ranging from 9% to 18%, with larger contributions yielding higher returns. This form of investment is similar to other High Yield investment schemes, such as “Bitconnect,” which went bankrupt in January of 2018.

Plus Token: How it works?

Plus Token is a classic Ponzi scheme that entices naive victims to invest by offering large returns with low initial investments. Plus Token created the appearance of a long-term enterprise by claiming that the funds would be used to build cryptocurrency-related items like the Plus Token Wallet and Exchange. Returns are created, on the other hand, by dividing recent investments to pay off older members. The idea of a long-term business is what qualifies this as a Ponzi Scheme, since victims assume they are investing in a company that produces high profits.

Plus Token had a robust referral program that paid out large incentives to members who referred friends and family to the program. Investors were divided into four “tiers” based on their investment amount and the number of additional referrals they would produce. This meant that the greater the amount of referrals a member made, the higher the reward. Members began referring their friends and family to invest large amounts of money in cryptocurrencies such as Bitcoin, Ethereum, EOS, and Litecoin.

Payments stopped at June 2019

The first signs of trouble appeared in June 2019, when users began noticing delays in fund withdrawals. Some users took to the Chinese social media platform "Weibo" to express their dissatisfaction, claiming that they had not received funds despite writing for 35 hours after sending withdrawal requests.

Initially, Plus token blamed the withdrawal delays on "higher miner fees." They reported that 1 sat /byte transactions were sent, causing long delays on the Bitcoin Blockchain. Plus, token supporters zealously encourage their followers to "believe" in the scheme and ignore "false facts."

"Sorry, we have run"

As money started to flow, one of the transactions included the note "Sorry, we have run" as a statement. This is self-explanatory – the scammers have begun their exit strategy and have fled the country.

Arrested Plus Token Members

According to information from Chinese news outlet CLS on July 30, 2020, the Ministry of Public Security detained 109 people in connection with the PlusToken scheme. This includes all 27 main suspects and another 82 core members suspected of being involved in the scam.

Plus Token still scamming?

On April 29, 2020, screenshots of the PlusToken app were circulated on Chinese social media, purporting to be a notification announcing the app's version 3.0 beta launch. The PlusToken team then released a further notice on May 4, 2020, stating that version 3.0 beta will undergo compatibility synchronization and that all transaction functions will be disabled. The note went on to say that once this version is live, some users who qualify would be rewarded. However, it appears that PlusToken's ringleaders are attempting to appease investors by giving them hope that the project will return.

Final thoughts

PlusToken is just the tip of the iceberg, as there are a slew of other crypto Ponzi schemes and scams out there. Cloud Token, S Block, and other cloud "mining" tokens are among them. Tokens that ‘guarantee' high returns without a transparent and auditable business plan should raise red flags, at the end of the day.

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