Any field involving cryptocurrency is almost always synonymous with a scam. The PlusToken scam, on the other hand, has had and continues to have an impact on the market. Let's take a look at one of the most important occurrences in cryptocurrency history.
PlusToken Scam
The PlusToken Scam, dubbed the "Biggest Scam in Cryptocurrency History," shook the entire crypto sector. The scam's effects can still be felt today. The people behind it were able to get away with 1% of Bitcoin's total supply by using age-old Ponzi scheme tactics.
PlusToken was created in July 2018 by a group of Chinese developers. The project was advertised as an investment opportunity that offered investors a high rate of return on their capital on a regular basis. The project appeared ridiculous from the start, but it managed to raise more than $3 billion from greedy investors. People with little knowledge of cryptocurrencies and an urge to get rich quick were the scam's target market.
While the authorities arrested a few of the perpetrators, the funds remain in the possession of those who fled. As a consequence, the scam's effects can still be felt today. We can still see what is being done with the funds because the blockchain is free and accessible to everyone. As funds are shifted from one wallet to another, the economy as a whole is affected.
A Year of Fund-Raising
The PlusToken scam had a long time to lay their traps, starting in June 2018 and peaking in July 2019. WeChat, word-of-mouth ads, grocery stores, and other strategies were used to spread the word.
An estimated 3 million people were defrauded by the PlusToken, though some claim the figure is even higher. PlusToken, according to its creators, is a project that will generate revenue through mining, exchange profits, and affiliate referrals.
The whole scheme was devised in such a way that each team member feels both involved and competitive. The participants were the main source of information about the scam. Each member was praised for spreading the word about PlusToken. Each person makes a contribution to their overall rewards. A level-based infrastructure was also created, with the more people brought in, the higher they ascend and the better their rewards become.
Overall, the project was well-thought-out, with ads, organised incentive schemes, and backdoors in place in the event of a crackdown. Six of the project's creators were apprehended by Chinese authorities in June, but the funds are still unavailable.
Taking charge of 1% of the total Bitcoin supply
By the time it was discovered in late 2019, the scam had amassed 200,000 BTC and 800,000 ETH from its victims. At the time, that amounted to about 1% of the total Bitcoin supply and 3% of the crypto market. PlusToken claimed to be a cryptocurrency wallet and defrauded investors of up to $3 billion in bitcoin. Although six of its masterminds were apprehended in June 2019, authorities were unable to seize 180,000 bitcoins (BTC), 6,400,000 ether (ETH), and 111,000 tethers (USDT) sent to PlusToken wallets by scam victims.
Other PlusToken conspirators were busy fragmenting deposited funds into different wallet addresses when its key orchestrators were in Chinese authorities' custody. The suspected mastermind behind the scam, Leo, is still on the loose. The funds are still in the possession of the con artists, who are searching for ways to reintroduce them into circulation as prices increase.
The Detrimental Effects of the Big Sell-Off
Wallets connected to the scam have repeatedly dumped their holdings. Since November 2019, the PlusToken scam has been selling 1,300 BTC every day on average. Any time a sell-off happens, this has caused the market to tremble with volatility.
To escape any liability, the sellers use Bitcoin mixers, which mask the funds' final destination, effectively rendering them invisible. A Mixer is a tool that allows you to exchange Bitcoin for Bitcoin as well as Bitcoin for other cryptocurrencies, such as sending Bitcoin for Ethereum.
Several sell-off days have been specifically associated with increased volatility and market downturn over the last four months. The funds were continuously sent to mixing sites, according to Chainanalysis, a cryptocurrency research website, so that the tracks could be concealed.
A transaction from the PlusToken to an unknown wallet in December 2019 could easily be a destination for a mixing service. The deal was estimated at $105 million at the time, and unlike the previous incident in November, it included 790,000 Ethereum tokens.
In the first week of March 2020, a similar incident occurred. A total of 130,000 Bitcoins were sent to a mixing service once more. The sell-off caused Bitcoin's price to plunge by 8-9 percent, demonstrating the connection between PlusToken Scam and the market price.
For the time being, the only thing one can do is hope that the perpetrators make a mistake and reveal their identities. The occasional sell-off is likely to continue until the funds are cleared. For the time being, it seems that we will have to survive the storm before they run out of holdings to sell.
