Plus Token (PLUS) Scam – Anatomy of a Ponzi

Table of Contents

Ponzi scheme disguised as a high-yield investment program. Platform administrators closed down the operation in June of 2019. Fraudsters abandoned the scheme by withdrawing over $3 Billion dollars in Cryptocurrencies (Bitcoin, Ethereum, and EOS) and leaving the message “sorry we have run“. This has led to an international manhunt for the platform administrators and creators of Plus Token. Plus token has been blamed for causing Bitcoin prices to fall in 2019 as stolen funds were sold via Bitcoin OTCs.

PlusToken had a major following in Korea and China – especially among investors not familiar with cryptocurrencies. Plus token was a High Yield investment program that offered massive rewards on “investment” to unsuspecting victims in China and Korea. The scheme offered 9% to 18% monthly returns on investment – with larger investments getting more rewards. This type is similar to other High Yield investment programs like “Bitconnect” which collapsed in January of 2018.

How did the Plus Token Ponzi Scheme Work?

Plus Token is a classic Ponzi scheme it lures unsuspecting victims to invest with promises of high returns and low investments. Plus Token maintained an illusion of sustainable business by pretending the funds are used to develop cryptocurrency-related products such as the Plus Token Wallet and Exchange. However, returns are generated by dividing more recent investments to pay off older members. The illusion of a sustainable business is what classifies this as a Ponzi Scheme, as victims actually believe that they are investing in a business that generates high returns.

[embedded content]

Plus Token also had a strong referral element, which gave huge bonuses to any member who referred friends and family into the scheme. Investors were divided into 4 “tiers”, according to how much they invested and how many other referrals they can make. This meant the more a member referred, the exponentially higher the return. Members started to refer their friends and family to invest in large sums of cryptocurrencies including Bitcoin, Ethereum, EOS, and Litecoin.

Plus Token relied heavily in conferences and meetups to promote the token. The following video is taken at a Plus token gathering.

Payments stopped 30th June 2019

Early signs of trouble started surfacing in June of 2019 as users started reporting delays in fund withdraws. Some took to complain on the Chinese social media site “Weibo” citing that they were unable to receive funds despite writing for 35 hours after submitting withdrawal requests (Source Blocktempo).

Initially, Plus token blamed on “higher miner fees” for the withdrawal delays. They claimed the sent transactions with 1 sat /byte, leading to long delays on the Bitcoin Blockchain. Plus token supporters avidly as their followers to “believe” in the system and disregard the “false information”.

Ring Leaders tried to convince the community that Plus Token will come back.

Scammers: “Sorry We have run”

As funds began moving, one of the transactions carried the note “Sorry, we have run” as a comment to the transaction. This really needs no explanation – organisers of the scam have initiated their exit strategy and fled the country.

109 members of Plus Token scam have been arrested

Reports from Chinese news outlet CLS on 30th July 2020 reported that 109 individuals have been arrested in connection with the PlusToken scheme by the Ministry of Public Security. These include all 27 primary suspects thought to be responsible for the scam and another 82 core members.

Is Plus Token still scamming users?

On 29th April 2020, there were screenshots of the PlusToken app circulating on Chinese social media of a supposed notice announcing that version 3.0 beta of the app is now online. Subsequently, on 4th May 2020, a further notice was issued by the PlusToken team saying that version 3.0 beta will undergo compatibility synchronization and will stop all transaction functions. The notice further added that once this version is live, some eligible users will receive a reward. However, it seems more like an effort by PlusToken’s ringleaders to placate those who have invested by giving them hope that the project may return.

Screenshots of the PlusToken app
Screenshots of the PlusToken app

Tip of the Iceberg

PlusToken can be seen as the tip of the Iceberg as there are many other very similar crypto Ponzi schemes and scams. These include Cloud Token, S Block, and other cloud “mining” tokens. At the end of the day, tokens that ‘guarantee’ high returns without a clear and audit-able business plan should generate red flags.

Laundering stolen funds into exchanges

Luckily research is being down to track wallets known to be associated with Plus Token (8btc.com, @doveywan, @PeckShield). Work done by @PeckShield has shown funds moving from large wallets (~5000+ Bitcoin) to smaller wallets, and eventually into cryptocurrency exchanges. Due to the large sums of cryptocurrencies moved and actively being sold off – Plus Token played a role in dropping the price of Bitcoin.

Map showing how Plus token funds are being laundered into Exchanges
Map showing how Plus token funds are being laundered onto Exchanges (Image credit: @Silkjaer)

Known amounts scammed – List sum of BTC from identified and tracked addresses. Reports have been circulating that up to ~1% of the entire Bitcoin supply is involved in the scam. Currently more wallets are being added to this list.

  • 70000 BTC ($700,840,000 USD)
  • 789511 ETH ($142,111,980 USD)
  • 26299109 EOS ($92,046,881 USD)

Known Bitcoin Wallet addresses (Source 1):

  • 1MFgcyJ7ZNSknbTBRaih6zWDE6V1A64tRY (1865 BTC)
  • 3ETAVt2scYBFkBFksuNDk1i5tDLQ2c4zWR (4922 BTC)
  • 3EYsru4LUcN258sENYPu5Py3S5WnqxEcnE (3657 BTC)
  • 3HKs1g7u5a1uU4pC5HaNooYMbL1Lao4mv4 (3928 BTC)
  • 3ESakThMrdVVrbhhcpf9spicyjCg1Uk8Jm (3289 BTC)
  • 33LNws16Wfs12usWBNfa1MSX3YKY6Hdayf (3270 BTC)
  • 3HwY536CxznDxMjiRCFkpx5ykwJbJMZY4w (1725 BTC)
  • 35bCzX3RQEWdquqCPQkmdJdu2K4ut1roUZ (3676.86 BTC)
  • 31owhyALzzPEqUFwRbU5yQR4wNhYEjCiE5 (749.66 BTC)
  • 3PBN3MCpDcZKr7WdyY1ULq1NeGwLNjpkj7 (12000 BTC)
  • 14bwh6gmvol5ntwbvxqjkjdtzv4y5ebtvm (95228 BTC)
  • 33FKcwFhFBKWHh46Ksmxs3QBu8HV7h8QdF (37922 BTC)

Known EOS Addresses of Plus Token

  • eospstotoken
  • jnhgvbkkfdjf

Known Ethereum Addresses of Plus Token

  • 0xF4a2eFf88a408ff4c4550148151c33c93442619e
  • 0x997114ca0830e9bee7443368fa27f4af2d4e55a6
  • 0x0f953ef137ee0894cc06383ccb1ef77e76660b5a

Plus Token Sell-offs Responsible for Bitcoin Price Drop?

Since as early as August 2019, Chinese cryptocurrency trading groups have already been circulating that due to the sheer amount involved, the scammers trying to dispose of the ill-gotten Bitcoin are pushing prices downward. And this price dump halted on 15th August 2019, coincidentally when Binance was suspended for trading because of a system upgrade.

Discussion on PlusToken sell-offs
Discussion on PlusToken sell-offs (Credit: 8BTC)

In late November 2019, this issue was again brought to the forefront when Twitter user Ergo reported having traced 187,000 BTC of the approximately 200,000 BTC attributed to PlusToken’s investors. As to these funds, Ergo found they were “shuffled” (albeit badly, if at all) and gradually sent to various cryptocurrency exchanges and OTC brokers, primarily Huobi, for sale on the market.

Ergo’s findings on the PlusToken funds

Ergo predicts that if all the “mixed” funds were sold from August to November 2019, it would average out to be around 1,300 BTC sold per day. This could lead people to think it would have an effect on Bitcoin prices, which has fallen from USD $9,981.41 on 1st August 2019 to USD $7,182.89 on 4th December 2019.

Based on Ergo’s estimates of the amounts sold daily, the sell-off of the remaining 58,000 BTC or so Plus Token funds would continue for another 1.5 to 2 months.

In an apparent pattern, PlusToken scammers move their funds when BTC prices experience volatility. Such was the case on 11th February 2020, when Bitcoin trading at around USD $9,800, almost 12,000 BTC (worth around USD $118 million) from one of the addresses associated with the Plus Token funds were moved and split amongst various other wallets.

On 7th March 2020, Bitcoin was again trading at over USD $9,000. Again, Plus Token funds were being funneled through mixing services. This time, Twitter user ErgoBTC noticed that a total of 13,000 BTC (worth around USD $210 million) was involved. Analysts such as Kevin Svenson believe the scammers were “slamming the market with sell orders” every time Bitcoin prices went up so as to unload the funds.

Is there a pattern to the movement of funds associated with Plus Token?

According to ErgoBTC, the movement of funds to exchanges took a bit of a break from mid-March to early May 2020. Movement to exchanges has since then resumed and around 300-500 BTC/day is being moved to exchanges.

Last of PlusToken funds moved to exchanges

On 22nd June 2020, Twitter user Whale Alert found over 26 million EOS (worth over USD$67mil) had been transferred from a wallet associated with PlusToken to an unknown wallet, prompting cryptocurrency traders to go on high alert for potential downward price movement for EOS.

Indeed on 24th June 2020 we did see a marked dip in EOS prices, though it cannot be confirmed that this was due to a sale of the PlusToken funds.

EOS prices from 22 to 26 Jun 2020
EOS prices from 22 to 26 Jun 2020

Only a matter of a few days later on 24th June 2020, Whale Alert found another huge chunk of PlusToken funds, this time over 789,000 ETH (worth over USD$187 million) had been transferred from a PlusToken wallet to a new address, and yet again to another unknown address.

These funds were then further split into multiple unknown addresses of varying amounts.

Twitter user ErgoBTC, who has been following the movement of the PlusToken funds observes that the ETH that was recently transferred is the remainder of PlusToken’s unmixed coins which are now being moved to mixers. The purpose of this is to cloud the movement history of the PlusToken funds, so that they can avoid being flagged by exchanges when they are eventually sold on the market.

In addition to the movements of EOS and ETH, it’s been a very busy week for PlusToken. So far they have moved over USD$428 million worth of cryptocurrencies to new addresses and the following exchanges: Binance, Huobi, HBTC, OKEx, Gate.io and MXC Exchange.

Are Exchanges doing anything to deter scammers?

Those behind Plustoken rely on cryptocurrency Exchanges to dispose of their scammed funds. Cryptocurrency exchanges do have Know Your Customer (KYC) measures in place which should identify and report any such activity since it clearly constitutes money laundering. However previous massive sell-offs by PlusToken took place in Huobi and Okex, thus demonstrating that their KYC and AML measures were ineffective in stopping them in that instance.

Since the previous selloff, exchanges have stepped up their standards. For example, in reaction to the selloff Huobi has launched Star Atlas, an on-chain analytics tool to identify problematic activities such as fraud and money laundering on their Exchange. Meanwhile, peer-to-peer exchange Paxful has partnered with Chainalysis so that the exchange’s transactions can be monitored in real time.

In the latest sell off, it has already been found that substantial funds are being mixed and deposited into Binance, Huobi, HBTC, OKEx, Gate.io and MXC Exchange. Nothing has happened yet, but many traders are already watching to see if a market crash could be incoming, whilst questioning whether the affected exchanges will take any action on the funds that are now in their hands.

Chinese police seized US$4.2b of PlusToken, forfeited to China’s treasury

Filings from the Yancheng Intermediate People’s Court reveal that authorities have seized 194,775 Bitcoin (BTC), 833,083 Ether (ETH), 1.4 million Litecoin (LTC), 27.6m EOS, 74,167 Dash, 487m XRP, 6bn Dogecoin (DOGE), 79,581 Bitcoin Cash (BCH) and 213,724 Tether (USDT) from 7 individuals convicted in connection with this case.

This totals around USD$4.2bn worth of cryptocurrencies!

Court filings have also indicated that the seized cryptocurrencies will be forfeited to the National Treasury. This is because in China, trading and dealing in cryptocurrencies is illegal. So victims have no legal right for return of the seized assets.

Hence some victims have joked that they have inadvertently contributed to the national treasury.

What is happening to Plus Token in 2022?

It seems that the Plus Token saga, which started all the way back in 2018 had drawn to a close in December 2020 when the court in Jiangsu province, China sentenced the ringleaders of the Plus Token scheme to up to 11 years imprisonment. The main ringleader, Chen Bo and 13 other ringleaders were sentenced to between 2 and 11 years in jail. They were also fined various amounts ranging from 120,000 yuan to 6 million yuan. Another associate, Chen Tao, who was responsible for transferring the illegally obtained funds, was sentenced to over 4 years imprisonment.

As mentioned in the previous section, all the confiscated cryptocurrencies obtained from the Plus Token fraudsters were turned over to the state.

The Plus Token scam however is not dead in 2022. We can see from various social media outlets that people making periodical videos saying that the Plus Token project is alive and that they are working with a top Asian cryptocurrency exchange. Furthermore, these “influencers” who apparently have connections with those involved with Plus Token allege that once Plus Token is launched, they will not have a native token but instead the Plus Token proceeds will be issued in the form of that exchange’s own token.

Note however that the “major Asian exchange” in question has never mentioned any working relationship with Plus Token, nor has there been any announcement that they will issue their own native token.

Plus Token Sources and References

Chinese Sources and News Coverage

Special thanks to Matthew Graham for providing the videos and research!

https://3kemao.com/archives/124864?from=singlemessage&isappinstalled=0 https://www.ccvalue.cn/article/3952.html?from=singlemessage https://mp.weixin.qq.com/s/EJLo-Rjjzz283FOCbzuLuA https://mp.weixin.qq.com/s/HQxl5gKd0105tUIsQ0TQPg https://mp.weixin.qq.com/s/rPtQAo0sf4P_LDM-8K0Z1g

Crypto Wallet Addresses

Chainnode Research: https://www.8btc.com/article/440193
BlockTempo: https://www.blocktempo.com/unable-to-withdarw-plustoken-is-crashing-down/
Plus Token Wallet Addresses: http://gscaijing.com/archives/21291
CoinTelegraph https://cointelegraph.com/news/3b-ponzi-scheme-is-now-allegedly-dumping-bitcoin-by-the-hundreds

Arrests / Man-hunt

SCMP: https://www.scmp.com/news/asia/australasia/article/3016604/six-chinese-nationals-wanted-beijing-internet-scam-arrested

SCMP: https://www.scmp.com/economy/china-economy/article/3112115/chinese-cryptocurrency-scam-ringleaders-jailed-us225-billion

Plus Token sell-offs and Bitcoin price correlation?

8BTC: https://news.8btc.com/bitcoin-dip-allegedly-a-result-of-incessant-bitcoin-selloffs-from-3-billion-ponzi-scheme

Findings from Twitter user Ergo: https://twitter.com/ErgoBTC/status/1197496064854634496?s=20

Updated on 4th December 2019 to include new section- Plus Token Sell-offs Responsible for Bitcoin Price Drop?
Updated on 18th December 2019 to correct spelling mistakes and more details of how the Ponzi Scheme operated
Updated on 9th March 2020 on the latest Plus Token moves in 2020.
Updated on 25th May 2020 on the latest PlusToken prosecutions and ver 3.0 beta of the app.

Updated on 25th June 2020 on the movements of PlusToken’s remaining unmixed funds in the week of 21st June 2020.
Updated on 2nd July 2020 on what exchanges are doing in response

Source