China transfers 7,000 ETH connected to the PlusToken scam

A crypto researcher has revealed that the Chinese government transferred 15,700 ETH linked to the multi-billion PlusToken Ponzi scheme from its wallets and 7,000 ETH to crypto exchanges, raising concerns over imminent liquidations.

Chinese whale wallets came to life for the first time in 2021. A researcher on X flagged that the wallets have transacted 15,700 ETH in the last 24 hours. Approximately 7,000 ETH (worth $16 million) of the remaining 542k ETH ($1.3 billion) was moved to wallets associated with exchanges, raising suspicion of an intent to sell. Some of the exchanges labeled by the researcher include Binance, Bitget, and OKX.

In early August, the remnants of ETH seized from the multibillion dollar PlusToken scheme awoke on-chain for the first time since 2021.

Over the last 24h about 7k ETH of the remaining 542k ETH ($1.3b) was sent to exchanges indicating intent to begin selling the remaining tokens. pic.twitter.com/tu2o7y4o4L

— ∴FreeSamourai∴ (@ErgoBTC) October 9, 2024

The crypto market showed signs of a slowdown on Wednesday following the news. Bitcoin opened the day at $62k before dipping to $60k during U.S. trading hours. On the other hand, ETH plummeted 3.2% on the same day. Bitcoin is exchanging hands for $60,775, down 2.56% in the last 24 hours. ETH has been down 2% in the last 24 hours and is trading at $2,393 at the time of this publication, according to Coinmarketcap.

PlusToken defrauds investors of $4 billion

PlusToken went bust in mid-2019, prompting the Chinese authorities to crack down and arrest the orchestrators. The ringleaders were arraigned in court and found guilty of defrauding investors. The Chinese court sentenced the perpetrators to eleven years in prison in December 2020.

The government confiscated $4 billion worth of crypto in November 2020, which was linked to the multi-billion PlusToken Ponzi scheme scam. The crypto assets were Bitcoin, Ethereum, Dogecoin, and XRP. PlusToken was an investment platform established by a ringleader known as Chen Bo in early 2018. Court documents revealed that the funds were handed over to Beijing Zhifan Technology Co. for conversion to fiat, and the proceeds were used as restitution.

The platform capitalized on blockchain technology to receive registration fees in crypto from millions of investors. The platform offered to give investors high returns based on the number of referrals they made and the amount they invested. The ring leaders compensated early investors with proceeds from new members while there were no real business or investment operations. 

Beijing Zhifan liquidates the confiscated Bitcoin

At its peak, PlusToken BTC clustered received more than 10,000 Bitcoin in inflows worth more than $80 million then. It is believed that the Ponzi scheme shut down with more than 200,000 BTC. The majority of the Bitcoin was sold between August 2019 and March 2020, liquidating $1.3 billion, at a time of a market cap of $160 billion. Today, the selling pressure would be equivalent to liquidating $10 billion, according to the researcher.

The researcher noted that ETH remained untouched in confined wallets since the seizure until the summer of 2021. He stated that a third of the 840,000 ETH was transferred to a wallet associated with an unpopular exchange called Bidesk and assumed to be sold. The remaining ETH is untouched in thousands of mixing addresses until August 2024, when the assets were reconsolidated to 294 addresses. The addresses held 542,000 ETH worth $1.3 billion until yesterday’s transactions.

According to data from Bitcoin Treasuries, China currently holds 190,000 Bitcoin. The jurisdiction trails behind the United States, which holds 203,239 Bitcoins, the largest Bitcoin holder among governments. The United Kingdom trails in third with a Bitcoin supply of 61,000.