Ponzi schemes like Plus Token have become all too common in the crypto world, emptying the pockets of unsuspecting investors and painting the crypto industry in a bad light. At Remitano, we believe that understanding the mechanics behind these massive frauds is essential to identifying a crypto scam early and protecting your hard-earned assets.
Among all the many types of scams and clever schemes to dupe crypto users over the past decade, the Plus Token Ponzi scheme is arguably the largest cryptocurrency scam of all time. Scammers stole more than a mind-boggling $3 billion worth of Bitcoin, Ethereum, and EOS from their investors, larger than even the infamous Bitconnect exit scam.
Months after the scam project collapsed, the criminals behind the scheme were suspected to be responsible for the fall in the Bitcoin price after a massive dump of some of the stolen funds.
What is Plus Token In Crypto?
The Plus Token is a Ponzi scheme under the format of a high yield investment program (HYIP), promising up to 18% monthly returns. It was shut down in June 2019, arrests were made, and an international manhunt for the remaining perpetrators of the Plus Token scam is still ongoing.
PlusToken was very popular in China and South Korea, especially among people who had little knowledge about cryptocurrency. The HYIP program promised massive returns on investment to innocent individuals. PlusToken offered between 9% to 18% monthly Return On Investment depending on how much they invested.
PlusToken is similar to cryptocurrency Ponzi schemes like Bitconnect, OneCoin, and Bitclub. They were all operated under the illusion of being high yield investment programs, which led to the loss of billions of dollars. The funds lost through the PlusToken scam were more than that of the other three mentioned schemes combined.
Source: Boxmining
Trading on some popular exchanges, $17 billion worth of PlusToken was in circulation. At its peak, it was worth $340 per Token and would have made it to the top four on CoinMarketCap if they had listed it.
How did the PlusToken Ponzi scheme become even more popular than the BitConnect scam?
Anatomy of the Crypto's Largest Ponzi Scheme
Plus Token was a classic Ponzi scheme, luring people into investing with promises of high returns with low investments. The Plus Token team was clever and careful at masking the real motive of the operation.
The scheme went relatively undetected under the pretense that the funds were used to develop the Plus Token wallet. In reality, the architecture of this scam relied on paying old members using returns generated from new investments.
In addition to the high return promises, Plus Token had an attractive and generous four-tiered referral program that compensated its members well. The referral program rewarded members that invited friends and family with massive bonuses.
How PlusToken Became Popular In Crypto World?
The referral program was instrumental in making PlusToken popular. Members were massively advertising through the WeChat app. Interestingly, the Plus Token team hosted conferences (popularly called "salons" in China) to promote the scheme. They also had lots of materials to teach users how to promote PlusToken to new investors.
PlusToken conference
PlusToken had a friendly mobile app that allowed users to directly buy BTC, ETH, EOS, and other coins with Chinese yen. They could then convert their coins to PlusToken on the app and also receive their returns only in PlusToken.
Source: Bitcoin Magazine
According to Bitcoin Magazine, some of the early investors received their returns, but the later investors didn't. The report didn't indicate whether the investors received their PlusToken rewards or not because the token eventually became worthless as the scam unfolded.
Crashed and Burned in June 2019
Trouble started to surface in June when users began complaining about delays in withdrawals. According to complaints made by PlusToken members on Chinese social media, Weibo, they couldn't receive funds after two days of withdrawal requests.
The PlusToken admins blamed increased miner fees for the delays in withdrawal. They claimed the withdrawal took so long because all the transactions were at 1 satoshi per byte. The low transaction fee purportedly led to long delays.
They kept telling people that Plus Token would come back while they continued moving the funds. After moving all the funds, the perpetrators left a suspicious note saying - "Sorry, we have run." At this point, it became evident that the Plus Token project was a total scam, with over 3 million investors falling prey.
Source: Boxmining
Investigation and law enforcement actions In Crypto Industry
The police arrested up to 6 suspects involved in the scheme in Vanuatu on the 29th of June 2019. The arrested individuals were de-ported to China.
Unfortunately, the initial arrests did not produce the expected results because law enforcement could not immediately recover the stolen funds from this sophisticated scam.
How scammers moved the funds?
The search to track down the wallets associated with PlusToken is still ongoing. An investigation by @PeckShield showed that the Plus Token funds were sent in small quantities to wallets and then dumped into exchanges, including Huobi and Bittrex Exchange.
A report stated that there might be approximately 1% of the total Bitcoin supply in the PlusToken scam. Popular crypto influencer Boxmining released a partial list of the wallets that have been holding the BTC associated with the PlusToken fraudulent network. The total assets included the following:
- 200,000 BTC
- 289,511 ETH
- 62,999,199 EOS
Was PlusToken's BTC dump the reason for the Bitcoin price crash?
During the BTC price dip around August 2019, this event was claimed due to the huge amount of BTC dumped by the PlusToken scammers. Coincidentally, this price fall stopped on the 15th of August when Binance suspended trading due to maintenance.
This happened again on the 11th of February 2020. About 12,000 BTC was moved from a Plus Token-associated wallet to other wallets. Bitcoin was trading at around $9,800 at the time.
A similar pattern was observed on the 7th of March. More of the Plus Token funds were dumped via mixing services when BTC was above $9,000. It was discovered that about 13,000 BTC was moved again, revealing the ongoing scale of the scam.
This pattern led analysts to believe that perpetrators of the PlusToken setup were dumping their coins whenever there was an increase in the price of Bitcoin.
The Plus Token Ponzi Scheme was a watershed event and cast a dark shadow on the history of cryptocurrency. It's a terrible reminder that where there is an opportunity to make money, there will always be malicious attacks from nefarious people.
To avoid falling victim to such vicious scams, you should:
- Stay away from any high investment yield programs that promise fixed high returns.
- Avoid investing in cryptocurrencies that are not listed on reputable indices like CoinMarketCap.
- Avoid multi-level marketing (MLM) structured crypto projects.
- Conduct extensive research on new crypto projects before investing.
- More importantly, educate yourself about the core values of cryptocurrencies.
- Only trade on trusted and transparent exchanges like Remitano.
Most importantly, remember that there is no such thing as a free lunch. And if something sounds too good to be true, it usually is a scam.
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