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Remember Bitconnect? Well, the scammers behind PlusToken would call that child's play.
Bitconnect held the record as the largest crypto scam to date, pulling in around $1 billion - then came PlusToken which grew to 3X that size, and showed no signs of slowing down when they pulled the plug.
But you've probably never heard of it. The ponzi scheme targeted Chinese traders almost exclusively, and managed to remain fairly unknown throughout the English speaking cryptocurrency community.
Considering a ponzi scheme's growth relies completely on word of mouth, that language barrier played a huge role in it not breaking into the US or European markets.
One post on the Bitcointalk message boards shows a perfect example of the disconnect between the Western and Asian crypto communities, where one user asks "Is it legit?" - the responses are generally people who haven't heard of it, and just one person promoting it. The thread ends with the official news that PlusToken has disappeared with everyone's money.
An estimated 10 million people scammed out of over $3 billion...
You won't find a Chinese crypto fan who doesn't know a dozen people who were caught up in it, which isn't surprising when you hear the scammers held over $3 billion worth of cryptocurrency when shutting down operations and attempting to disappear.
New pieces of the investigation have just been shared with the Global Crypto Press, giving a glimpse into the last days of PlusToken as the scammers behind it panic and attempt to clean their crypto, and erase the trail leading from their victims to themselves.
Scrambling to erase that trail they flooded Bitcoin mixers with upwards of 50,000 BTC (a mixer swaps coins between random anonymous users, juggling them internally before finally sending cryptocurrency back to the user, causing the coin to become untraceable.)
But the volume of coins they needed to clean was far beyond what these mixer sites are able to process, if there isn't an equal amount of coins being sent to the mixers by other people, they're just swapping coins with themselves.
That's when they took to exchanges with higher volume such as Huobi and Bittrex, attempting to manually mix them themselves. The hope was that they could sell dirty coins while buying up clean ones - but anyone experienced with blockchain technology could tell you, this isn't a great plan. Adding a couple entries to the ledger, and falling extremely short of 'hiding their trail'.
This is where everything fell apart. The coins they were trading on exchanges led right to their origins. At this point, it didn't matter anyway.
Because what the PlusToken leaders didn't know, is that they were already being watched.
This becomes clear looking at the timeline starting June 27th, the date when users began reporting that their funds were no longer accessible and the PlusToken platform was down. Just 5 days later on July 2nd, Chinese authorities announced 6 people behind the scam were already behind bars.
Funds currently accounted for include 50,000 BTC sent through mixers, 35,000 floating around the market, and 20,000 sitting in wallets still untouched.
Authorities are still searching for additional key figures behind the scam who fled China before arrests could happen.
Scammers know - you can't trust a scammer.
In a twist of irony, those who escaped arrest are unable to spend any of their earnings. Out of fear they could end up turning on eachother, the wallets holding the scammed crypto uses multisig.
Multisig means it requires keys from more than 1 person to unlock, so if some members of the criminal group are in prison while others are free - everyone is locked out.
This includes the Chinese government, so you can be sure they're aggressively hunting down anyone who could possess one of the private keys needed to unlock the PlusToken wallets.
If this wasn't enough - there's another one coming!
An unexpected find while investigating PlusToken - an alarming number of people who were promoting it were also recommending another, called 'CloudToken'.
Clearly, yet another ponzi scheme that's spreading fast through Chinese social media.
I also noticed that for many, PlusToken served as a wakeup call. Ignorant users who were once blindly excited about promises of 10% monthly profits (120% per year, like I said - clearly a scam) are now beginning to ask the right questions - such as 'how?".
But for now, CloudToken is flying high - partying hard like they're using Bitconnect 2017 as their guide.
When the day comes, tracking down the people behind CloudToken won't be a challenge - he goes by 'Ronald Aai' and he just couldn't resist the spotlight.
Closing Thoughts...
It seems like every geographical area, divided by language differences, will experience some kind of crypto scam of their own.
The victims of today become the people who warn others in the future. But you don't get an army of anti-scammers until a lot of people get scammed.
The mixture of excitement and confusion surrounding cryptocurrency has proven to be the perfect target for these awful, scum people - and as much as I wish I could wrap this piece by sharing the simple solution, I don't think one exists. I think it may just be an unavoidable bump in the road for every new market crypto breaks into. Warn people if the opportunity presents itself, but they may just have to learn the hard way - if it's too good to be true.. you probably already knew.
-------
Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk
Inside The Final Days Of The $3 BILLION Chinese Crypto Scam... And There's ANOTHER One Soon To Collapse!
Remember Bitconnect? Well, the scammers behind PlusToken would call that child's play.
Bitconnect held the record as the largest crypto scam to date, pulling in around $1 billion - then came PlusToken which grew to 3X that size, and showed no signs of slowing down when they pulled the plug.
But you've probably never heard of it. The ponzi scheme targeted Chinese traders almost exclusively, and managed to remain fairly unknown throughout the English speaking cryptocurrency community.
Considering a ponzi scheme's growth relies completely on word of mouth, that language barrier played a huge role in it not breaking into the US or European markets.
One post on the Bitcointalk message boards shows a perfect example of the disconnect between the Western and Asian crypto communities, where one user asks "Is it legit?" - the responses are generally people who haven't heard of it, and just one person promoting it. The thread ends with the official news that PlusToken has disappeared with everyone's money.
An estimated 10 million people scammed out of over $3 billion...
You won't find a Chinese crypto fan who doesn't know a dozen people who were caught up in it, which isn't surprising when you hear the scammers held over $3 billion worth of cryptocurrency when shutting down operations and attempting to disappear.
New pieces of the investigation have just been shared with the Global Crypto Press, giving a glimpse into the last days of PlusToken as the scammers behind it panic and attempt to clean their crypto, and erase the trail leading from their victims to themselves.
Scrambling to erase that trail they flooded Bitcoin mixers with upwards of 50,000 BTC (a mixer swaps coins between random anonymous users, juggling them internally before finally sending cryptocurrency back to the user, causing the coin to become untraceable.)
But the volume of coins they needed to clean was far beyond what these mixer sites are able to process, if there isn't an equal amount of coins being sent to the mixers by other people, they're just swapping coins with themselves.
That's when they took to exchanges with higher volume such as Huobi and Bittrex, attempting to manually mix them themselves. The hope was that they could sell dirty coins while buying up clean ones - but anyone experienced with blockchain technology could tell you, this isn't a great plan. Adding a couple entries to the ledger, and falling extremely short of 'hiding their trail'.
This is where everything fell apart. The coins they were trading on exchanges led right to their origins. At this point, it didn't matter anyway.
Because what the PlusToken leaders didn't know, is that they were already being watched.
This becomes clear looking at the timeline starting June 27th, the date when users began reporting that their funds were no longer accessible and the PlusToken platform was down. Just 5 days later on July 2nd, Chinese authorities announced 6 people behind the scam were already behind bars.
Funds currently accounted for include 50,000 BTC sent through mixers, 35,000 floating around the market, and 20,000 sitting in wallets still untouched.
 |
| Security audit firm Peckshield created this visual aid showing PlusToken's fund distribution. |
Authorities are still searching for additional key figures behind the scam who fled China before arrests could happen.
Scammers know - you can't trust a scammer.
In a twist of irony, those who escaped arrest are unable to spend any of their earnings. Out of fear they could end up turning on eachother, the wallets holding the scammed crypto uses multisig.
Multisig means it requires keys from more than 1 person to unlock, so if some members of the criminal group are in prison while others are free - everyone is locked out.
This includes the Chinese government, so you can be sure they're aggressively hunting down anyone who could possess one of the private keys needed to unlock the PlusToken wallets.
If this wasn't enough - there's another one coming!
An unexpected find while investigating PlusToken - an alarming number of people who were promoting it were also recommending another, called 'CloudToken'.
Clearly, yet another ponzi scheme that's spreading fast through Chinese social media.
I also noticed that for many, PlusToken served as a wakeup call. Ignorant users who were once blindly excited about promises of 10% monthly profits (120% per year, like I said - clearly a scam) are now beginning to ask the right questions - such as 'how?".
But for now, CloudToken is flying high - partying hard like they're using Bitconnect 2017 as their guide.
When the day comes, tracking down the people behind CloudToken won't be a challenge - he goes by 'Ronald Aai' and he just couldn't resist the spotlight.
I was unable to locate any trustworthy data on CloudToken to estimate how bad it will be when it comes crashing down, but based purely on levels of chatter - if PlusToken held $3 billion, I would guess CloudToken holds around $1 billion.
Closing Thoughts...
It seems like every geographical area, divided by language differences, will experience some kind of crypto scam of their own.
The victims of today become the people who warn others in the future. But you don't get an army of anti-scammers until a lot of people get scammed.
The mixture of excitement and confusion surrounding cryptocurrency has proven to be the perfect target for these awful, scum people - and as much as I wish I could wrap this piece by sharing the simple solution, I don't think one exists. I think it may just be an unavoidable bump in the road for every new market crypto breaks into. Warn people if the opportunity presents itself, but they may just have to learn the hard way - if it's too good to be true.. you probably already knew.
-------
Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk
