Chainalysis Report on PlusToken 'Scammers' Blamed for Monday’s Crypto Selloff

As bitcoin and ether prices fell below technically significant levels, some traders are citing fear emanating from a report about the alleged PlusToken Ponzi scheme as the reason for the plunge

AccessTimeIconDec 16, 2019 at 10:47 p.m. UTC
Updated Sep 13, 2021 at 11:50 a.m. UTC

As bitcoin and ether prices fell below technically significant levels, some traders are citing fear emanating from a report about the alleged PlusToken Ponzi scheme as the reason for the plunge.

The slide began at 18:28 UTC on Monday. In just seven minutes, bitcoin slipped 4 percent, to $6,800 from $7,085 according to data from Coinbase. In that time, ether took a bigger hit, dropping 7 percent from $140 to $130. Neither had seen such lows since Nov. 25, when the crypto markets suffered a temporary selloff.

With little news to go on, the markets found at least one culprit: Chainalysis’ new report, published nearly four and a half hours earlier in the day, saying 20,000 BTC (now worth $137 million) and 790,000 ETH (now worth $102 million) remain likely controlled by PlusToken “scammers.”

Further, Chainalysis claims $185 million in stolen bitcoin have already been liquidated by individuals related to PlusToken.

Six people tied to PlusToken were arrested and extradited to China from Vanuatu, where Beijing claimed the company operated a Ponzi scheme. Chainalysis said it was able to track down $2 billion in cryptocurrencies taken from victims, with a lot of that going to other “investors” – a hallmark of traditional pyramid schemes.

The arrests occurred a little more than a week before bitcoin reached its 2019 peak of $12,575.90. Since then, the cryptocurrency, which represents the lion’s share of the sector’s overall market cap, has drifted downward. While Chainalysis wouldn’t say for certain that liquidations from PlusToken-related accounts sunk bitcoin’s price, the blockchain forensics firm was willing to claim “that those cashouts cause increased volatility in Bitcoin’s price, and that they correlate significantly with Bitcoin price drops.”

A trader at an over-the-counter cryptocurrency broker attributed Monday’s steep decline to jitters that more of PlusToken’s ill-gotten bitcoin and ether was going to flood the market.

“This [Chainalysis post] may have something to do with it, driving a little bit of fear among participants,” he told CoinDesk, quickly adding: “It’s not news. I’m not sure why that story is driving the market. People see stuff on Twitter and make their own conclusions. It’s largely the tail wagging the dog.”

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
First Mover Asia: Bitcoin Holds Above $21K in Weekend Trading; Solana Web3 Phone Faces Long Odds

Ether stays over $1,200; prior blockchain phones have failed because the market has realized their functionalities are already available via apps that can be loaded onto any old phone.

CoinDesk - Unknown
2
CoinDesk - Unknown
Opaque Platforms and Intertwined Protocols Pose Big Risk to Crypto

Second article in a series about risks we’re thinking about during these crypto down days.

CoinDesk - Unknown
3
CoinDesk - Unknown
Putin Weaponizes Inflation

Examining a recent propaganda speech from the Russian leader.

CoinDesk - Unknown
4
CoinDesk - Unknown
Morgan Creek Is Trying to Counter FTX’s BlockFi Bailout, Leaked Call Shows

FTX’s $250 million credit facility offer – if inked as initially proposed – stood to effectively wipe out all BlockFi shareholders, including Morgan Creek Digital, the firm told its investors.

CoinDesk - Unknown