In a significant development within the cryptocurrency sector, Chinese authorities are reported to have sold approximately 194,000 Bitcoin (BTC) confiscated from the notorious PlusToken Ponzi scheme. This sale, estimated at nearly $20 billion, has raised questions about China’s transparency regarding digital asset management and its potential impact on the crypto market.
Launched in April 2018, PlusToken was a cryptocurrency-based Ponzi scheme that primarily targeted investors in China and South Korea. Promising high monthly returns through its wallet application, the scheme attracted a vast user base. By mid-2019, it had amassed over $2 billion worth of cryptocurrencies from unsuspecting investors. The operation came to a halt in June 2019 when six Chinese nationals associated with PlusToken were arrested in Vanuatu and extradited to China. Subsequently, in July 2020, China’s Ministry of Public Security announced the arrest of 109 individuals linked to the scam.
Following the crackdown, Chinese authorities seized a substantial amount of digital assets, including 194,000 BTC. Initially, officials stated that these assets were “transferred to the national treasury,” without providing further details on their disposition.
However, recent analyses suggest that these Bitcoin holdings were sold. Ki Young Ju, CEO of blockchain analytics firm CryptoQuant, highlighted on-chain data indicating that the seized BTC were mixed and transferred to exchanges such as Huobi shortly after the seizure. He noted, “There’s no point in using mixers and multiple exchanges if they didn’t sell it.”
Further supporting this claim, a 2022 report by Valkyrie Investments, utilizing CryptoQuant data, observed a significant reduction in PlusToken-associated Bitcoin holdings—from 171,000 BTC in August 2019 to less than 50,000 BTC by December 2019. This period coincided with a sharp decline in Bitcoin’s price, dropping from approximately $12,000 to $6,000, suggesting that the liquidation may have exerted downward pressure on the market.
The alleged sale of such a large volume of Bitcoin by a state entity underscores the challenges in managing and regulating digital assets. While the immediate market impact appears to have been absorbed, the event raises concerns about the potential volatility introduced by large-scale liquidations.
While this event may be a few years old, it is a perfect example to highlight the complexities surrounding the management of confiscated digital assets. It also emphasizes the need for greater transparency and regulatory frameworks to address the challenges posed by the growing influence of cryptocurrencies in global finance.
