Up to $1.3 Billion in Ethereum From PlusToken Ponzi Scheme Set to Hit Exchanges: Analysts

As much as $1.3 billion worth of Ethereum seized from the PlusToken Ponzi scheme could soon be transferred to cryptocurrency exchanges for sale, according to on-chain data.

OXT Research’s pseudonymous analyst Free Samourai indicated in a tweet Wednesday that some of these funds have already been sent to exchanges including BitGet, Binance, and OKX.

The price of Ethereum is currently down 1.5% on the day but is flat over the past week, trading at around $2,448, per data from CoinGecko.

Blockchain analytics firm AMLBot further confirmed OXT Research’s data through an independent investigation conducted on Decrypt’s behalf.

What was PlusToken?

PlusToken was a Ponzi scheme that operated in China between 2018 and 2019, attracting 2.6 million participants. Authorities dismantled the operation and seized significant amounts of cryptocurrency.

An AMLBot representative noted that “the remaining amount, roughly 542,000 ETH, was distributed across numerous wallets and began moving in August, ultimately being consolidated into 294 separate addresses.”

Earlier this week, blockchain analyst FreeSamourai observed that around 7,000 ETH ($17.2 million) out of the 542,000 ETH (valued at $1.3 billion) seized from PlusToken has reached exchanges, “indicating intent to begin selling the remaining tokens.”

Chinese Police Seize 1% of Bitcoin’s Total Supply

Chinese police have seized a total of 194,774 Bitcoin—a total 1% of the Bitcoin total supply—over the PlusToken Ponzi scheme, as reported by The Block.  In addition, they have also seized over 830,000 ETH, 1.4 million LTC, 27 million EOS, 74,000 DASH, 487 million XRP, 6 billion DOGE, 79,000 BCH, and 213,000 USDT. The PlusToken Ponzi scheme, which was first ruled on by a district court in China's Jiangsu province this September, reportedly began in May 2018. The scheme advertised a non-existent...

He noted that “15,700 ETH was transferred out of [PlusToken’s] last known addresses,” and out of that, “just over 7,000 ETH was sent to a handful of exchange deposit addresses.”

“Given the recent effort to re-obfuscate the ETH, it is unlikely that the active distribution of the 15,700 ETH moved yesterday is the last of the 540,000 ETH supply distribution,” FreeSamourai wrote. The looming sale of the PlusToken Ethereum was cited among the reasons for the lack of optimism seen in the crypto market by crypto investment firm QCP.

Calvin Ferreira, head of ecosystem and growth at Bitcoin layer-2 network BitcoinOS, told Decrypt, “Given that the total amount involved is about $1.3 billion, any significant liquidation could dramatically increase selling pressure, leading to a further drop in Ethereum’s price.”

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Anmol Jain, head of investigations at blockchain forensics and compliance firm AMLBot, told Decrypt that the movement could anticipate increased sell pressure, worsen market sentiment, and potentially cause a liquidity decline. Still, “the actual impact would depend on factors like the amount of ETH involved, the timing of the transfers, and the overall market context at that time.”

As Decrypt reported in late 2020, the PlusToken case resulted in Chinese police seizing about 1% of Bitcoin’s total supply. Local authorities also seized over 830,000 ETH, 1.4 million LTC, 27 million EOS, 74,000 DASH, 487 million XRP, 6 billion DOGE, 79,000 BCH, and 213,000 USDT. Local law enforcement was also able to prosecute six PlusToken team members in early September 2020.

In a 2020 court document, officials reported transferring the seized assets to Zhifan Technology Beijing for liquidation, with the intent for the funds to eventually be distributed to victims. Per OTX Research, it is believed that the Bitcoin was sold on exchanges, and some of the Ethereum was liquidated, leaving 542,000 ETH remaining.

Edited by Stephen Graves