PlusToken scam may lead to more than just loss of crypto holdings

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The only thing worse than a scam that wipes out over $3 billion in cryptocurrency asset is a scam that wipes out those assets and causes the crypto market to collapse. That’s the analysis expected to be produced in a report by Chainalysis, which will be released next January.

According to a blog post by Chainalysis, the crypto and blockchain analysis group is going to release the Chainalysis 2020 Crypto Crime Report that discusses what could be the largest Ponzi scheme in the history of crypto, PlusToken. Individuals behind the scam have already been arrested in China, but funds are still moving around and being converted to fiat through over-the-counter (OTC) brokers. 

Chainalysis has followed the trails wherever it could and determined that “the PlusToken scammers have cashed out at least $185,000,000 worth of stolen Bitcoin via OTC brokers. Those who analyze cryptocurrency markets know that large liquidations generally tend to depress the price of Bitcoin, and others have asked if PlusToken-related cashouts are dragging down Bitcoin.”

The analysts add, “[We] see that PlusToken wallets sent a steady flow of Bitcoin starting in mid-April and spiking just before the arrests in late June. After that, we see no movement until a few spikes in August, before transfers spike again and remain high throughout September. Then, we see a few more spikes in October. As we hypothesized, spikes in on-chain flow to OTC brokers correlate with drops in Bitcoin’s price. There can be a lag, as Bitcoin that is moved on-chain to an exchange is not immediately traded. We see the best example on September 20th, when PlusToken scammers made a large cash out of roughly $34 million worth of Bitcoin. Following that transfer, Bitcoin’s price drops steadily between September 24th and 26th, falling from just over $10,000 to about $8,000 and remaining there for roughly a month.”

While the analysts admit that they cannot say for certain that the price fluctuations seen with BTC were caused by the PlusToken movements, there is enough evidence to support the theory as plausible. Since there are still at least 20,000 BTC floating around after the scam, worth around $150 million, additional supporting evidence might be seen. Unfortunately, it also might mean the crypto market crashes in order to prove the theory correct.