According to experts the recent downturn in the cryptocurrency markets could well be linked to the sheer volume of Bitcoin being dumped into the market by PlusToken, a $3 billion Ponzi scheme.
Over the last few days Chinese traders have reported an unknown address has been continually bumping blocks of 100 BTC on crypto exchange Binance and it’s suspected these trades are connected to PlusToken.
PlusToken appeared midway through 2018 promising investors higher than normal levels of return that attracted over 10 million members in little over 6 months. However, as those returns were offered at 4 different levels depending on what level of membership an investor chose, PlusToken also displayed all the hallmarks of a classic Ponzi scheme.
Earlier this month those fears were made public by Dovey Wan, founding partner of Primitive Ventures, a blockchain investment company.
Ms Wan had noticed the amount of crypto PlusToken was selling off. As well as publicising the details of the wallet addresses PlusToken were using, Ms Wan implored legitimate exchanges to snub them, especially given one of the key people behind the scam has already been arrested by Chinese police who found the scheme had already stolen more than $3 billion from investors. This makes the PlusToken scam the largest single incident of crypto-related theft in 2019 according to blockchain security firm CipherTrace.
The bad news for investors is it looks unlikely that their funds will be returned. Because the addresses being used require multiple signatures, catching everyone who holds a key is proving almost impossible for the authorities.
Ponzi schemes are nothing new. They are named after Charles Ponzi who, as far back as the 1920s, ran fraudulent investment schemes in which a company would pay the returns it promised its original investors using capital provided by new investors. However, the fast and abnormally high returns that cryptocurrency allows fraudsters to promise has seen a massive rise in crypto based Ponzi schemes over the last 2 years.
Unfortunately, these hugely attractive returns can cause even the most experienced investors to forget to employ common sense and that is when money –often large sums of money – are lost.
Over the last few years we have helped a long list of clients recover the money they’ve lost in Ponzi type scams. Our experience has taught us there are 4 questions every would-be investor should ask themselves before deciding whether to invest in a new scheme:
- Are the ‘guaranteed returns’ believable?
If you’re being offered a guaranteed” returns of more than 20% a year (or worse still, per month), alarm bells should ring.
Firstly, there is no such thing as a guaranteed result as no one can predict what will happen in any market for sure.
Secondly, that level of performance is simply not achievable on any type of consistent basis in any industry.
- Is there a credible business model?
If they are promoting what the return is but can’t explain how it’s to be achieved, be concerned.
3. Are they claiming the investment is ‘risk-free’?
Sorry, no! There is always an element of risk in every investment.
- Are they based overseas?
If the scheme you’re being asked to invest in is based in a country on the other side of the world, you need to think why that is. Often, it’s because it makes it harder for potential investors to conduct the level of due diligence they ought to before handing over their money and because it makes it more difficult to progress the specialist legal action required to recover funds.
As lawyers who specialise in cryptocurrency fraud, we have all of the experience required to manage the legal action required to recover any funds lost to a scam or a Ponzi scheme. If you have been a victim of crypto or digital fraud and would like to discuss what you should now, please call us today on 020 7792 5649 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it..
We will help.
