PlusToken Scam Triggered the Bitcoin Bear Trend, But It’s Not the Sole Factor


The PlusToken Ponzi scheme has and continues to impact the price of Bitcoin as funds are liquidated via OTC brokers, but half the problem facing the BTC market is a lack of buying demand according to analyst Alex Krüger. 

PlusToken Dump

PlusToken promised its “investors” monthly returns of anywhere from 10 to 30 percent in its eponymous token (PLUS), which traded on such popular exchanges as Huobi and Bithumb. This attracted more than 200,000 Bitcoin, 789,000 ether, and 26 million EOS, as reported by Chainalysis.

While six individuals connected to PlusToken were arrested in June, the stolen funds have continued to move through wallets and be cashed out through independent OTC brokers operating mostly on the Huobi platform, showing that one or more of the scammers are still at large. 

Starting in mid-April the coins have been being dumped and these spikes in on-chain flow to OTC brokers correlate with drops in Bitcoin’s price

An impact is registered when looking at trade volume, too. Chainalysis saw a rise in trades of Bitcoin for Tether starting on September 23rd, a few days after the PlusToken wallets sent a large volume of Bitcoin to Huobi OTC brokers. Shortly after, on September 24th, the price of Bitcoin began to drop.

It’s Only Half the Problem of Bitcoin Drop

bitcoin price

Markets are a two-way street (Source: @krugermacro)

From this analysis, a conclusion can be made that PlusToken cashouts correlate with drops in Bitcoin’s price, but not that Bitcoin price drops are caused solely by PlusToken cashouts.

The cashouts likely caused increased volatility in one of two ways: either directly by increasing the supply of Bitcoin and changing market dynamics, or indirectly by affecting traders’ perception of the market.

“Keep in mind that PlusToken cashouts are just one of many potential influences on Bitcoin’s price. Media stories, concerted market manipulation efforts, algorithmic trading errors, or any number of other factors may have contributed to volatility as well,” said the firm. “But none of those components on their own provides a compelling explanation for the large spike in volatility in the time period we studied absent the influence of PlusToken.”

Analyst Alex Krüger points out that these dumps are only half the reason Bitcoin sits where it does today. Down 50% from July, a lack of buyers and a lack of buying demand in the BTC market holds some of the blame, not just the scam.

As he puts it: “Markets are a two-way street.” 

The ride isn’t over yet: Chainalysis reported that while approximately 25,000 BTC ($168 million) has already been cashed out, 20,000 BTC (worth over $134 million) is still waiting to be dumped. Further, 790,000 ETH ($101 million) sits entirely untouched in a single wallet.

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