Sell-off linked to Ponzi Scam Pushes Bitcoin Price Below $7,000

Sell-off linked to Ponzi Scam Pushes Bitcoin Price Below $7,000

Bitcoin prices across the market have dropped below $7,000 level, with traders attributing the latest sell-off to a report about the PlusToken Ponzi scam.

Bitcoin slid from $7,085 to just above $6,800, dropping by more than 4 percent on the day. Price data from Coin360 also showed that the sell-off also impacted ether prices Monday. Ethereum lost close to 7 percent ($10) within minutes as prices fell from $140 to $130.

As the market took notice of the dips, traders pointed to a report by crypto tracking platform Chainalysis released just hours earlier.

According to the Chainalysis report, scammers linked to the Chinese Ponzi scheme PlusToken still held over $239 million worth of Bitcoin and Ether that was likely to end up in the market.

Scammer liquidate $185 million worth of Bitcoin

The firm reported that the scammers were in control of 20,000 BTC worth about $137 million and 790,000 ETH valued at $102 million. That’s not all. Chainalysis pointed to the possibility that individuals affiliated with PlusToken had already liquidated over $185 million worth of BTC using over-the-counter (OTC) platforms.

In the report, Chainalysis looked at how bitcoin’s price drops correlated to potential PlusToken liquidations. An example is a 20 percent drop in BTC prices last September. Beginning September 24, scammers allegedly cashed out their loot worth over $34 million, a move that impacted BTC prices.

The fear might have resulted in the price dip, but like Chainalysis, some traders have pointed out the difficulty of truly linking the sell-off to PlusToken trades only. Most of the OTC trades are suspected to be on Huobi. However, it’s difficult to completely isolate trades related to PlusToken funds and many of the other trades taking place on the exchange.

Scammers offered PlusToken to unsuspecting online users- mostly in China- in exchange for top cryptocurrencies BTC and ETH. By the time authorities arrested the masterminds, the group had swindled users of 180,000 BTC and 6,400,000 ETH. The total stolen and stashed into PlusToken wallets amounted to over $2 billion.

At the time police arrested the scammers on June 27, 2019, Bitcoin traded at prices above $12,500. Since then a downtrend has seen prices drop close to 50 percent, despite a brief recovery in October that was buoyed by optimism surrounding remarks by Chinese president Xi Jinping about blockchain.

Bitcoin currently trades at $6.913 to the dollar, 2.57 percent down in the last 24 hours.

Featured image courtesy of Shutterstock.

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