Chinese Police Arrest 27 Suspects Allegedly Behind PlusToken’s $5.7 Billion Bitcoin Scam
- This is the first time that Chinese police act to bring down a large-scale Ponzi scheme using BTC as a means of exchange.
- Investigators have so far uncovered 109 alleged leaders and core members, operating from countries all over the world.
Illustration from Freepik
On July 30, Chinanews, a state-owned media outlet, announced that the Ministry of Public Security in China have arrested 27 people allegedly responsible for one of the largest Bitcoin scams of all time – PlusToken. CoinDesk reported on the topic earlier, which helped us put together this article.
According to the announcement, the ministry began its investigations into PlusToken last year when it discovered the scale of the project’s wrongdoings. They set up a task force as a part of a yearlong campaign to take down the operators and track the people responsible, going as far as Vanuatu, Cambodia, Vietnam, and Malaysia. As previously reported in March, the investigators claimed that the fund had around $669 million in BTC in its wallets when the criminal activities were first uncovered.
PlusToken is a Ponzi scheme organization disguised as a high-yield investment program based in Yancheng, Jiangsu. The fraudsters operated on a global scale, enticing investors from Korea and China by offering them massive returns on their investments – 9% to 18% monthly.
The company maintained an illusion of sustainable business by pretending to develop cryptocurrency products such as Plus Token Wallet and Exchange while issuing returns generated by dividing recent payments to pay off older members – a classic pyramid scheme.
After the closedown of the operation in June 2019, the criminals have withdrawn over $3 billion in crypto, leaving behind only the controversial message, “sorry we have run”. Since then, the Chinese ministry has led an international manhunt to find the administrators of the platform and the fraudsters behind PlusToken.
This case marks the first time that Chinese police manage to unravel a major international Ponzi scheme that uses Bitcoin as a means of exchange. Law enforcement has reported that the 109 leaders and core members that were arrested had fled the country at the time and it’s not clear where they were apprehended. Since the organization had an international scale of operations, many suspects were involved in its activities globally, six of whom were recently extradited to China from Vanuatu.
- The DoJ discovered the Forsage used smart contracts with coding consistent of a Ponzi scheme, and charged its four founders with conspiracy to commit wire fraud.
- The U.S. SEC charged nearly a dozen individuals involved in the DeFi platform in August 2022, while the Philippines SEC flag Forsage as a Ponzi scheme back in 2020.
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- BitConnect’s founder Satish Kumbhani was charged with conducting a $2 billion security fraud.
- The SEC also charged a BitConnect promoter, who recently pled guilty for stealing $24 million from investors.
- The Chinese court has ruled that all proceeds from the seized crypto will go to the national treasury, though it remains unknown how the assets will be processed.
- A total of 15 people connected to the scheme have been convicted so far, with sentences ranging from 2 to 11 years.