Analysts indicate that the large quantities sold by PLUS Token operators through different exchanges generated fear among users and investors, who chose to sell their bitcoins to mitigate possible losses.

According to information published by various news agencies, the large-scale Ponzi scheme of Chinese origin, called PLUS Token, apparently put up large amounts of Bitcoin for sale through several exchanges, allocating between 50 and 100 BTC in each operation.

Reports indicate that PLUS Token is the largest ponzi-type scam in all of China, which managed to capture more than 70,000 BTC and 800,000 ETH to date from millions of investors, who entered this pyramid scheme making the respective investment with cryptocurrencies to The expectation of receiving great profits.

Ponzi schemes in crypto

A Ponzi scheme is a type of pyramid scheme, in which a project offers a return to investors who invest their money in it. In this type of scams, the new investors are the ones who contribute the capital to pay to the oldest ones, the problem comes when new clients stop entering this scheme since the last ones that have entered will not recover their investment and possibly not receive any type of income

The first investors obtaining their first benefits, begin to speak well of the project and its good profitability, showing its profits and promoting it to its circle of friendships, making it appear that the system is lawful and attracting new investors.

In addition, to continue maintaining their source of income for as long as possible, the creators of these schemes offer incentives to those who bring new investors to their platform. In this way, each investor is a potential recruiter who will make the maximum effort to attract new investors and therefore new capital to the platform and thus take his incentive, making the wheel of this scam turn a little more.

The only beneficiaries of these schemes in addition to the creators of it are those who first invested in it since they are the ones who receive the payments from the first moment and in the best case they will even get a benefit. Since Bitcoin appeared and blockchain-based initiatives began to move the world, numerous “companies” that promise these gains have been reported, which have stolen millions of dollars in BTC from their investors.

Attempting against the market

Dovey Wan, director of Primitive Ventures, signaled through his Twitter account, indicating that the sales derived after the operations carried out by the PLUS Token operators resulted in earnings of more than USD $3,000 million.

Wan collated the figures with the drop seen in the price of digital currency and identified a certain relationship that strongly impacted the Bitcoin ecosystem, as sales generated fear and uncertainty among investors who wish to secure profits by exchanging cryptocurrency to mitigate possible losses.

The auditing firm Peckshield followed up on this complaint and identified that the PLUS Token operators began selling BTC since July, sending approximately 1,000 bitcoins to Bittrex and Huobi. The researchers also detected that the company was marketing small amounts of Bitcoin among other less-known exchanges, which makes it difficult to track operations.

Other reports say that PLUS Token also sent around 100 BTC to Binance in a set of operations, in which he deposited small amounts to avoid suspicion.

Providing information to the authorities

Both Wan and the Peckshield investigators recommend those interested to follow up the operations related to PLUS Token, as this information could be useful for local authorities investigating complaints of scams perpetrated by the company.

PLUS Token started operating in 2018, under the premise that it offered users a high-profit margin due to the investment made with cryptocurrencies. The offer was very attractive for many people, but to generate greater profits, participants had to attract new customers who also made their investment with cryptocurrencies.

Currently, the authorities are after the search for the main operators. Surveys estimate that PLUS Token has more than 10 million users participating in the pyramid scheme.

Reviewing previous cases of crypto Pyramid Schemes

  • Onecoin

An alleged cryptocurrency called OneCoin, which far from following the usual steps for its launch, with the realization of an Initial Offer of Currency (ICO) and its respective White Paper (white paper), asks to start investing in educational packages.

The information about the origin of OneCoin is not clear, as it is said that the cryptocurrency is mined by servers in Bulgaria and Hong Kong. However, it is impossible to exchange onecoins for any other virtual or fiat currency, the exchange being valid only between the members of the company, and access to the “tokens” is possible by acquiring the courses. OneCoin is currently subject to investigations in many countries in Europe and Asia, in some its operations are banned and their offices have been raided, seizing money and securities.

  • Minerworld

Recently denounced in Brazil, Minerworld is a company created in 2016 and directed by Cícero Saad, Jonhnes Carvalo and Hércules Gobbi. It was first introduced as a processing power rental company to mine Bitcoin, an activity that they supposedly handled in China and Paraguay. The business was based on recruiting new members and bonuses. Cars and trips are offered to those who enter more people who contribute to the “company’s growth”.

Investors expect the money back. Minerworld moved its platform and denied all accusations. Now the promise is to pay part of the debt with your own currency: MCash, a virtual creation without any support or quotation, available on your systems.

  • BitConnect

Closed last January on orders from US financial regulators, the BitConnect platform was launched in 2017. The company managed a referral system, where users exchanged and lent to others the virtual currency BitConnect Coin (BCC). The objective was to generate interest based on the number of loans made.

BitConnect affiliates invested bitcoins, which in turn were converted to BCC through an internal exchange. A class-action lawsuit against BitConnect executives and promoters is currently ongoing: Glenn Arcaro, Ryan Hildreth, Trevon Brown, John Doe and Craig Grant, among others, to recover lost funds amounting to more than $700,000.

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