There’s a scary reason why Bitcoin is down 5% this morning to hover at just over $10,000 once again.
Tech media are reporting a Chinese Ponzi scheme called PlusToken has been unloading Bitcoin in gargantuan amounts, dumping hundreds of Bitcoins on exchanges like Binance repeatedly.
The PlusToken business has been in the public eye for a few weeks. Writing at FXStreet July 3, Rajarshi Mitra characterized the scheme this way, noting that company communications constituted an unusual “exit strategy”:
“It is claimed to have disappeared with users’ funds which is approximately estimated over $3 billion worth of crypto deposits,” Mitra wrote. “However, the digital presence of the company including its website, Twitter account and other social media accounts has not been wiped out, while claiming some technical glitches.”
Now, Chinese police reportedly have found some of the masterminds responsible for bilking their clients out of a combined $3 billion – the mug shots are available over at Bitcoinist.
“The core team were apprehended by police two months ago and will be in jail for decades, according to Wan,” writes Emilio Janus. “However, the reported $3 billion of cryptocurrency they scammed out of members has not been recovered. Many of the Bitcoin wallet addresses used are believed to be multi-sig, leading to speculation that some key holders remain at large.”
Firms like Peckshield and Chainalysis are monitoring the coin activity, and officials are trying to manipulate wallets to fix the problem.
Still, the inundation of the exchanges with Bitcoin is driving down BTC value.
That leads many investors to think about worst-case scenarios and how a sudden selloff can affect the Bitcoin market.
As Marie Huillet suggests in breaking reporting on this at Cointelegraph today, it is possible to buy on a dip – but everyone who has already jumped on the bandwagon for sky-high Bitcoin prices is going to experience some consternation if values stay low.
It’s also a key marker of how bad volatility can be in the crypto market – in this case, linking a particular coin to fraudulent behavior creates a powerful downward pressure.
We’ll continue to look at what’s happening as this story unfolds.