PlusToken scam: China seizes $4.2B in digital currencies

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Chinese authorities have seized over $4 billion in digital currencies from PlusToken, allegedly one of the largest scams in the industry. As per court documents, the seized funds will be taken over by China’s national treasury.

PlusToken gained global infamy in 2019 after it emerged that the scam had defrauded close to $3 billion from millions of investors. The company presented itself as a South Korean digital currency wallet and exchange. However, authorities said it was nothing more than a Ponzi scheme which relied on promises of quick riches to lure investors.

New court documents have revealed the extent of the scam, including the number of investors it defrauded and the funds the Chinese government recovered. According to court documents from the Jiangsu Yancheng Intermediate People’s Court, Chinese police had seized over $4.2 billion in digital currencies at today’s prices.

The funds include 194,775 BTC, 1.4 million LTC, 833,083 ETH, 79,581 BCH, 27.6 million EOS, 74,167 DASH, 6 billion DOGE, 487 million XRP and 213,724 USDT.

As per the court documents, first reported by The Block, Chinese law enforcement agencies recovered the funds from seven PlusToken operators.

“The seized digital currencies will be processed pursuant to laws and the proceeds and gains will be forfeited to the national treasury,” the court documents revealed. The court didn’t, however, reveal if the court would be looking to sell off the digital currencies in the near future. It also didn’t reveal if the government intended on refunding the investors.

A lower level court in Yancheng made its ruling on the PlusToken case on September 22. However, it had withheld its ruling from the public as some of the perpetrators had filed appeals. The appellants saw a higher court in Jiangsu province dismiss their appeals on November 19.

While the $4.2 billion is the biggest amount recovered in a cryptocurrency scam case, it still represents about half the funds that the scammers stole. As per the court documents, the scam defrauded 314,000 BTC, 11 billion DOGE, 9 million ETH, 51 million EOS, 96,023 DASH, 1.84 million LTC and 928 million XRP from over 2.6 million investors.

The scammers, and their families, spent over $19 million to purchase luxury cars and over 20 real estate properties, the court found.

As CoinGeek reported, Chinese authorities arrested 109 members of the PlusToken scam in July. 27 of the arrested suspects were key leaders, with the others being members. Blockchain analytics firm Chainalysis found that the scammers used digital currency mixers and privacy wallets like Wasabi to cash out.

See also: CoinGeek Live panel on Digital Currency & Global Compliance: Tools & Tips for Exchanges, Wallets & Other Service Providers