The operators of one of the biggest digital currency scams have been sentenced to jail for up to 11 years. A Chinese court also fined the PlusToken operators up to $900,000 for their roles in the $2.25 billion Ponzi scheme.
PlusToken was founded in early 2018 by Chen Bo, posing as a South Korean wallet and exchange. It lured investors with promises of quick and guaranteed returns. In the two years that followed, Bo brought on several others and expanded the scam to other Southeast Asian countries including China, Cambodia, Malaysia, Vanuatu and Vietnam.
The Chinese government brought an end to the scam in July 2020, arresting 109 PlusToken operators. Of these, 27 held executive positions at the scam.
A Chinese court has sentenced the key operators of the Ponzi scheme. As South China Morning Post reports, the court in Yancheng, in the eastern province of Jiangsu has sentenced Chen Bo and 13 of his co-conspirators to between two and 11 years behind bars.
The newspaper revealed that the court also imposed fines on the 13, ranging from 120,000 yuan ($18,285) to 6 million yuan ($914,000). One of Bo’s accomplice, Chen Tao, was sentenced to four years in prison. Tao was in charge of transferring and laundering the illegal gains.
As CoinGeek recently reported, the Yancheng court ruled that the National Treasury would take over the seized funds. These include 194,775 BTC, 487 million XRP and 6 billion DOGE. Collectively, the seized digital currencies were worth $4.2 billion at current prices.
PlusToken operators had devised a pyramid scheme that managed to lure over 2.6 million investors, authorities said. The scam was organized into at least 3,200 investor levels, with more referrals and bigger investments bumping an investor up the chain. The operators also lied to investors that they were making money through digital currency investing, according to investors.
As the Yancheng court uncovered, the orchestrators just used new investment to pay back some of the initial investors, in a true Ponzi scheme manner. They also used some of the funds to buy luxury cars and homes, invested in real estate and organized plush events to lure more investors.
In November 2020, Chinese authorities jailed perpetrators of yet another digital currency Ponzi scheme. A court in Yancheng sentenced four operators of $1 billion scam WoToken to nine years in prison. The court also ordered the four to pay $63.6 million in fines.
WoToken had acquired the moniker PlusToken 2.0 after it defrauded 700,000+ investors of $1 billion. Just like PlusToken, it promised investors quick riches while claiming to be trading digital currencies for profits.
Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift and Ethereum—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.
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