PlusToken was a cryptocurrency Ponzi scheme that operated from April 2018 to June 2019, defrauding an estimated 3 million investors—primarily in China and South Korea—of between $2 billion and $3 billion in digital assets. The scheme marketed itself as a cryptocurrency wallet offering returns of 9-30% monthly through claimed exchange arbitrage, mining income, and referral benefits, while actually operating as a classic Ponzi structure that used new investor funds to pay earlier participants.
Overview
Founded by Chinese national Chen Bo (using the pseudonym Chen Zihan) and associates, PlusToken presented itself as a South Korean-based cryptocurrency wallet and investment platform. The scheme employed multi-level marketing (MLM) tactics with referral bonuses spanning up to 10 levels, incentivizing members to recruit new investors. This structure created over 3,200 hierarchical layers and drove viral expansion across Asia, particularly through the messaging platform WeChat, in-person meetups, and supermarket advertisements.
Investors deposited Bitcoin, Ethereum, EOS, and other cryptocurrencies into the platform in exchange for the proprietary PLUS token, which operators claimed would reach $350 in value. Early investors who received genuine payouts became vocal advocates, creating an illusion of legitimacy that attracted millions more participants.
On-Chain Analysis and Market Impact
Blockchain analytics firm Chainalysis tracked approximately 180,000 BTC (roughly 1% of Bitcoin's total supply), 6.4 million ETH, 111,000 USDT, and significant quantities of other cryptocurrencies flowing from victims to PlusToken wallets, totaling approximately $2 billion. This represented one of the largest concentrations of cryptocurrency ever controlled by a single fraudulent operation.
Following the scheme's collapse in June 2019, when withdrawals were frozen and operators posted the message "sorry we have run," analysts observed massive outflows to over-the-counter (OTC) trading desks, primarily on the Huobi exchange. Chainalysis analysis found that PlusToken liquidated approximately 25,000 BTC (around $185 million) between August and November 2019, with an additional 20,000 BTC remaining in over 8,700 addresses.
The firm's analysis identified a statistically significant correlation between PlusToken fund transfers to OTC brokers and Bitcoin price volatility during this period. Bitcoin fell from approximately $12,000 in July 2019 to under $7,000 by December 2019. While multiple factors contributed to this decline, Chainalysis concluded that PlusToken liquidations created increased volatility and correlated with price drops, noting that spikes in on-chain flow to OTC brokers preceded declines in Bitcoin's price.
The scammers attempted to obfuscate fund movements through mixing services including Wasabi Wallet's CoinJoin protocol, address reuse, and splitting funds across thousands of addresses. However, poor operational security—including abnormal transaction patterns and inadequate mixing techniques—enabled blockchain analysts to track the majority of stolen funds.
Law Enforcement Action
Chinese authorities launched investigations in July 2019 following the platform's collapse. In June 2019, Vanuatu police arrested six Chinese nationals suspected of being core operators and extradited them to China. The Ministry of Public Security announced in July 2020 that a comprehensive crackdown had resulted in the arrest of 109 individuals, including all 27 primary suspects who had fled abroad and 82 other key members. These arrests occurred across multiple countries including Cambodia, Malaysia, and Vietnam.
Authorities seized cryptocurrency assets valued at over 40 billion yuan (approximately $5.7 billion at 2020 exchange rates), including 194,775 BTC, 833,083 ETH, 1.4 million LTC, 27.6 million EOS, and substantial quantities of other cryptocurrencies. In November 2020, a court in Yancheng, Jiangsu Province sentenced the ringleaders to prison terms ranging from 2 to 11 years. Chen Bo and his co-conspirators received the maximum sentences along with fines up to $900,000.
Chinese authorities ordered that seized assets be forfeited to the National Treasury, as cryptocurrency trading and dealing is illegal in China. This decision meant victims had no legal right to recover their stolen funds, leading some to remark they had "inadvertently contributed to the national treasury."
Impact and Aftermath
The PlusToken case represented the first major international cryptocurrency Ponzi scheme investigated by Chinese law enforcement and contributed to heightened regulatory scrutiny. The scheme's scale and market impact demonstrated the systemic risks posed by large-scale cryptocurrency fraud, particularly regarding unregulated OTC brokers providing money laundering services.
Individual victims faced severe financial hardship, with losses ranging from modest savings to life-changing sums. Many investors sold assets or took loans to participate, and the emotional toll included broken relationships and community distrust. The case became a textbook example in academic and legal studies of cryptocurrency fraud, driving increased adoption of blockchain forensics tools and calls for improved Know Your Customer (KYC) protocols across the industry.
References
- Chainalysis (December 2019). "PlusToken Scammers Are Dumping on Huobi, May Be Eating Into Bitcoin Price"
- China Ministry of Public Security (July 2020). "109 Arrests in PlusToken Pyramid Scheme"
- CGTN (August 2020). "109 people arrested in $5.7 bln PlusToken pyramid scheme"
- MIT Technology Review (January 2020). "Millions of people fell for crypto-Ponzi schemes in 2019"
- OXT Research (January 2020). "On-Chain Bitcoin Analysis Reveals New Depth of PlusToken Scam"
- South China Morning Post (November 2020). "PlusToken ringleaders sentenced to 2-11 years"
- CoinDesk (December 2019). "Chainalysis Report on PlusToken Blamed for Crypto Selloff"
- Boxmining. "Plus Token (PLUS) Scam – Anatomy of a Ponzi"