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PlusToken's $2bn Bitcoin scam has been tanking crypto prices since July: here's what you need to know

Harry Hamburg
Harry Hamburg
6 min read
PlusToken's $2bn Bitcoin scam has been tanking crypto prices since July: here's what you need to know

This week, crypto prices have been all over the place.

On Friday I was inundated with blockfolio alerts.

First prices were down 15%, then up 5%, then down 5%, then up 10%… then I worked out how to turn off those incessant alerts.

Today, the overall crypto market is right back where is was last Monday. And Bitcoin is about $400 up.

But those 7-day charts hide the chaos that was happening daily.

On Tuesday, Bitcoin went below $7,000 and the floor fell out.

This was it, “the support had been broken” and it was going to freefall forever. At least, that’s what the technical analysis bros were saying.

And I guess it did. Until it didn’t. As it always does.

Bitcoin finally bounced back a couple of days later, rebounding from $6,500 all the way to $7,300 in under 12 hours.

Today, it’s sitting pretty at $7,500.

You can see it all playing out in the Christmassed-up chart I made below.

Source: coinmarketccap

what the hell happened?

$2bn crypto scam has been dumping its Bitcoin on the market since July

On Monday, Chainalysis – the same Chainalysis I wrote about in my Monero feature back in August 2017 – released their report on one of the biggest ponzi schemes in history.

Not just one of the biggest in crypto, but in any market.

The scam in question is called PlusToken. Chances are, you weren’t directly caught up in it, because it took place mainly in South Korea and China.

But, if you hold any crypto, you will definitely be feeling its consequences.

That’s because PlusToken managed to scam people out of over $2 billion of crypto.

And since its creators were caught in June, they have dumped at least $185 million of it onto the market, according to Chainalysis’ investigation.

In fact, Chainalysis even showed how the scammers’ dumping is directly tanking Bitcoin – and so all crypto – prices.

You can see their chart below (which is much less Christmassy than mine).

Source: Chainalysis

If we look at Bitcoin’s trajectory over the whole year, it’s clear that Bitcoin has been struggling since July.

Which is exactly when the PlusToken scammers started dumping their crypto. You can see it play out in my second Christmassy chart below.

Source: coinmarketcap

How is this going to affect crypto prices going forward?

The good news is, PlusToken was shut down and many of its people arrested. So it’s not scamming any more people out of any more money.

 The bad news is, that’s what prompted the scammers to start dumping.

And the really bad news is, according to Chainalysis, they still have around $150 million worth of Bitcoin and around $105 million Ethereum left to dump.

On Thursday PlusToken moved almost all of its remaining Ethereum to another wallet.

Source: Twitter

And that’s why crypto prices, and Ethereum prices in particular, were going crazy on Friday.

So over the next few weeks, we’re likely to see some big price movements in crypto, and some extreme ones in Ethereum.

Given that Ethereum has some very big things scheduled for 2020 – including Proof Of Stake – some people will see this as a golden opportunity to buy cheap.

Others may hold off, or even sell until the PlusToken dump is over.

And PlusToken themselves, may not even end up dumping all those Ethereum. Although it’s highly likely they will.

The address in question will already have been backlisted by most major exchanges. So that will make it much harder to dump those Ethereum on an open market.

But seeing as PlusToken did most of its Bitcoin dumping through private “over the counter” sales, and not on open exchanges, the blacklisting may not even matter.

So how this all plays out is anyone’s guess.

But one thing’s for sure, there’s never a dull moment in crypto.

And so long as you follow the three golden rules – which I list near the end of this article: why are crypto prices falling? The definitive guide – you can sit back and enjoy the ride.

How did the PlusToken scam work and how can you avoid getting taken in by other scams like it?

PlusToken worked like most scams throughout history.

It promised impossible gains for people who invested in it. And then it made off with those poor people’s money.

PlusToken was promising 9% to 18% returns a month. Not a year – which most people would kill for anyway – but a month.

That equates to around 630% profits a year – which would themselves be compounding.

The reason people believed in this scam is because this is crypto. And some people really do make those kind of returns when the market is in a bull run.

So they may not seem that ridiculous to many crypto investors.

But here’s the thing.

The “mega gainz” in crypto happen as a direct result of supply and demand on the open market.

They do not happen in the way that PlusToken was promising.

Plus token was simply a Ponzi scheme, whereby new investors’ money would be used to pay off earlier investors.

As Chainalysis states:

“PlusToken presented itself as a cryptocurrency wallet that would reward users with high rates of return if they purchased the wallet’s associated PLUS cryptocurrency tokens with Bitcoin or Ethereum. The scammers claimed those returns would be generated by “exchange profit, mining income, and referral benefits.”

PlusToken’s payouts came to an abrupt end in June when its ringleaders fled with the $2 billion of crypto they had scammed out of people.

Within days, they were caught, arrested and extradited back to China to face trial.

But of course, that wasn’t the end of the story because they, or someone they were working with, still had access to all the crypto they scammed.

And that’s when the dumping started. Which brings us nicely up to date.

So what’s the lesson here?

First of all, it pays to always do your own research.

If something seems too good to be true, it probably is. So always look into it yourself before you put any money into it.

Secondly, if it isn’t clear how a project is making money, then chances are it’s doing something shady.

Thirdly, these kind of Ponzi scams usually have extreme referral bonuses.

If we remember back to what’s probably crypto’s most famous Ponzi, Bitconnect – it was giving ridiculous referral rewards, which is how it scammed so many people.

PlusToken was no different. You got put into a “higher tier” if you referred more people or invested more.

Chances are, if you’re reading this, you’re not the target market of these kind of scams. They usually go after people who aren’t very crypto, or even internet, savvy.

But it does always pay to keep your guard up in the world of crypto.

And on that note…

What’s the biggest crypto scam going on right now?


This is one “project” you should definitely avoid.

Although I have to admire the brazenness of creating a scam project and naming it hex, which literally means “curse”.

This is a Ponzi hybrid created by a guy named Richard Heart. There is a pretty good analysis of it by Goldman Sats on medium.

But the Cliffs notes are basically Hex is a sophisticated scam, whereby Richard Heart will end up with around 50% of all the money people invest into it.

As Goldman Sats says:

“What makes HEX so effective is that it doesn’t fit neatly into any category of scam. It’s not quite a pyramid, a Ponzi or a multi-level marketing scheme, though it certainly has elements of all. It’s something entirely new, which allows it to pass through the internal cognitive firewall most people have that they use to determine whether or not they are being conned.”

And that’s before we even get onto Heart himself. The man known as the “spam king”, who claims he invented spam email.

He has spent decades scamming people both online and offline.

According to CCN, he was investigated in Panama for theft and extortion, and was successfully sued for his spam email schemes back in 2002.

So in summary, avoid Hex for the curse that it is.

Okay, that’s all for this week.

Have a fun Christmas.

Thanks for reading.


Crypto NewsbitcoinchainalysisEthereumHexplustoken

Harry Hamburg

This is all, just like... my opinion, man.

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