- Chinese authorities last week seized $4.2 billion worth of cryptocurrencies from the PlusToken wallets
- The Chinese authorities have said they will liquidate the tokens but have not said when or how
- Is the spectre of a massive crypto market dump over, or does the threat remain?
The threat of a PlusToken dump has hovered over the crypto markets ever since the scale of the Chinese Ponzi scheme was first revealed in August last year. The scam managed to rake in an incredible haul of over 300,000 BTC and 9 million ETH in a little over a year, plus a collection of other tokens, but with the news last week that Chinese police had seized $4.2 billion worth of their gains, are fears of a market-wide dump now over?
PlusToken Scammers Have Been Selling Since March
PlusToken was one of the biggest crypto scams ever, with Chinese authorities stating that 310,000 BTC and 9.17 million ETH were stolen among a tranche of other tokens in the Ponzi scheme that ran from May 2018 to August 2019.
Potentially sensing that the net was closing in, the PlusToken scammers began moving and selling huge amounts of cryptocurrency, causing small-scale market dumps along the way. The fear has always been however that the entire haul, worth an astonishing $10 billion, would be liquidated, which would precipitate a massive market-wide crash.
Chinese Police Seize $4.2 Billion
When it was revealed on Friday that Chinese police had seized $4.2 billion worth of PlusToken funds, the market collectively held its breath, wondering how the Chinese authorities, who have little regard for the cryptocurrency market’s health, would act. The answers were swift and not entirely reassuring:
…the seized digital currencies will be processed pursuant to laws and the proceeds and gains will be forfeited to the national treasury.
The document, dated November 19, did not state how much, if any, had already been sold, or in what manner. If the government wants to realise the full value of the haul, which surely they must, then they will seek a way to do the deal OTC. Nevertheless, the spectre of a market-wide crash, or several smaller ones, still looms large. This prospect isn’t helped by the fact that there could still be some $6 billion worth of crypto in PlusToken wallets still out there, according to Chinese cryptocurrency reporter Wu Blockchain:
So while the funds are safer in police custody than with the PlusToken scammers, we can’t yet be completely sure that the market is safe from the ghost of PlusToken, especially with billions still sloshing about in the ether somewhere.