PlusToken 2.0? New Chinese Ponzi scheme nets $1B in digital currencies

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China has brought down the mega digital currency scam PlusToken, but it appears investors have yet to learn their lesson. A new scam has been reportedly defrauding investors in China for years now, taking off with over $1 billion. The script is almost identical to PlusToken’s—double your investment.

Known as WoToken, the scam has been targeting Chinese investors for years now, local outlet Qianba reports. Chinese authorities recently brought it to a halt, arresting the six people involved. The six are currently facing trial in Yancheng City.

The report reveals that the six suspects came up with the idea for WoToken back in July 2018. They branded it as a digital currency trading platform that was making use of algorithmic trading bots to generate profits for their investors. All the investors had to do was put in a certain amount of digital currencies and await some very high income on a regular basis. They also stood to earn income through referrals. However, it turned out to be a multi-level marketing (MLM) Ponzi scheme where late-stage investors paid off the earlier investors.

WoToken managed to lure hordes of investors, with the report putting the total number of investors at 715, 249. The scam raked in 46,000 BTC, 292,000 Litecoin, 684,000 EOS, 56,000 BCH and over 2 million Ether, collectively worth over 7.8 billion yuan ($1.1 billion), according to the news outlet.

The report also revealed that two of the founders of WoToken had been previously imprisoned, a fact they concealed from their investors. Gao Yudong had been sentenced to 10 years in prison back in 2009 in connection with an illegal business operation, but has been released in 2014. He was allegedly responsible for organizing the MLM activities across China, according to the report.

The other culprit, Tian Yongbo, was imprisoned for three years in 2010. He was responsible for the storage of the digital currencies, authorities said.

The prosecutor recommended different prison sentences for the alleged operators, depending on the role they played at WoToken. They range from six months for one of the suspects who cooperated with authorities to recover stolen funds, to 11 years for Gao Yudong, who allegedly organized all the MLM activities.

China has become a fertile ground for digital currencies scams, despite the hostile stance the government has taken towards digital currencies. The biggest one yet is PlusToken, a scam that shook the world of digital currencies, taking off with more than $4 billion from hundreds of thousands of investors.

And as CoinGeek reported just a month ago, yet another scam by the name Antimatter Kingdom managed to raise $12 million in just three weeks, although its founders claimed to have raised over $1.2 billion. The scam promised a utopian world where commercial civilization is orderly.