While some of the larger cryptocurrency scams are dying out in Europe, the largest Ponzi scheme in the cryptocurrency space is beginning to spread in China and other countries in Asia. This scam directly siphoned $6 billion from investors and was valued at as high as $17 billion before its founder ran away. In the end, it only left investors with one sentence: "Sorry, we ran away." In June 2018, information about a new crypto wallet and exchange flooded Chinese social media chat groups. What started as a group led by a community leader of an unknown crypto company quickly spread throughout China and soon spread to much of Asia via WeChat and other messaging apps. In general, these groups seem innocent enough at first, with people offering free education on the basics of cryptocurrency, teaching users how to start buying and trading, and giving examples of how to make money. The groups are small, with 100 to 200 people in a chat room, and anyone who raises any issue that the organizers don't want to be mentioned will be kicked out of the organization. Soon, PlusToken, the company behind the group, began hosting conferences and meetups in China and South Korea, and soon after, events were also held across much of Southeast Asia and as far away as Russia, Ukraine, Germany, and Canada. There are some things in common among the biggest cryptocurrency scams . Like OneCoin and Bitconnect , the organizers behind PlusToken know how to attract a crowd. Their venues were packed with people eager to learn more about the buzzwords surrounding Bitcoin and cryptocurrency, and how they could start owning some digital currency themselves. Despite the cryptocurrency market crash, those who have not yet entered the cryptocurrency field remain optimistic, hoping that they can replicate the myth of getting rich quickly in previous years. PlusToken easily attracted these people, releasing charming promotional videos featuring its members, or paid actors, giving passionate speeches, drawing more and more people to its fan base and growing chat groups. These people — it’s unclear if they were paid or not — were presented as ambassadors for the brand and called on PlusToken’s Korean and Chinese audiences to join their groups. No one seemed to notice (or mind) that no employees (or anyone claiming to be from the company) came to the front. Still, PlusToken’s leaders appear to have a clear plan, and it works: Get people to trust them, build up their expectations of high returns on their investments, and then suddenly respond to their real demands. Soon after the group was created, PlusToken representatives began mentioning an investment platform that promised high returns of 6% to 18% per month as long as members invested $500 first. Is “decentralization” safe? "Decentralization" was and is a gatekeeping word in the crypto market. It is touted as if something is decentralized, especially if it uses blockchain technology, then it must be good. In some cases, this is the reality. Centralized institutions are notoriously vulnerable to hacking. Countless companies that store data on centralized servers have been hacked, with hackers sharing users’ private data for everyone to see. There have been many examples of this in the mainstream media. Experian, Adobe, LinkedIn, and Yahoo are just some of them that have shown the world what happens when large companies holding large amounts of highly sensitive and valuable data on their users do not take adequate security measures or pay little attention to protecting customer data — websites are often breached and data of millions of users is exposed. In the cryptocurrency space (as we will see with the examples of Quadriga and Mt. Gox), many cryptocurrency exchanges that did not have adequate cybersecurity measures in place were hacked, causing millions of cryptocurrency investors to lose all of their funds. Anything that mentions the word “decentralized” is considered a safety net. Launching a decentralized cryptocurrency wallet and exchange platform, PlusToken, soon after launch worked and was a perfect marketing strategy. PlusToken repeatedly assured that its platform was secure, boasting that they used artificial intelligence technology and invested billions of dollars in security technology research, that their core members came from the original technical teams of Samsung and Google Pay, and that their development was carried out in their R&D lab in South Korea. Buying, storing, and spending cryptocurrencies is often considered the hardest thing to do, and this was especially true in the years before PlusToken launched in 2018: the user experience was lacking. There are many cryptocurrency wallets in the market, but none of them provide a simple user experience. Cryptocurrency users need a cryptocurrency wallet with the best and easiest user experience and guaranteed security. The first company to make a wallet with a good user experience will create excess wealth. For promising cryptocurrency wallet companies, they were (and are) a huge user base and can earn a transaction fee from each remittance. PlusToken is not the first company to realize this. PlusToken and its wallets and exchanges are eager to get more users and funds to maximize the use of their new wallets. The community that PlusToken has built does not have typical cryptocurrency early adopters, investors or users at all, but only ordinary people with a get-rich-quick mentality. People trust PlusToken because it is a builder of online community relationships, and the team is committed to popularizing the community. Of course, this gives them a perfect opportunity to set up popular science courses to mislead and deceive community members. In 2015, the PlusToken team said it had developed an artificial intelligence robot for arbitrage trading (a trading method of buying and selling assets, usually repeatedly, to take advantage of price differences in different markets to make a profit). The robot will allegedly focus on price arbitrage across different exchanges in Bitcoin and other cryptocurrency markets. Cryptocurrency arbitrage trading is very risky. Due to the marginalization and unregulated nature of the cryptocurrency market, there is virtually no security: cryptocurrency exchanges often shut down and go bust, and investors are likely to fall victim to hackers or their founders’ exit scams. Exchanges can also shut down certain wallets, preventing users from sending or accessing certain cryptocurrencies; it is easy to lose coins in a trade, sometimes even in the middle of a transaction. This makes arbitrage trading the riskiest form of cryptocurrency trading. PlusToken doesn’t seem to pay much attention to these risks. They told investors that their robot, AI Dog, will make money for each user. SmartDog will capture the price and volume of each major cryptocurrency across different exchanges and — according to a statement on the PlusToken website — will perform arbitrage trades on its own. All the user needs to do is deposit $500 worth of any liquid cryptocurrency into the PlusToken platform. The smart dog will then automatically trade with the highest yield and return the cryptocurrency and profits to the user's wallet. While regular cryptocurrency wallets don’t provide any benefits to their owners other than storing cryptocurrencies and keeping them safe, PlusToken boasts that its users can not only store cryptocurrencies in its wallets, but also earn returns on their crypto holdings. PlusToken also touts the security of its wallet, assuring users that their product is truly decentralized and that the cryptocurrencies held by users will be securely stored in their decentralized wallets. There is one small factor that PlusToken glosses over in terms of how the wallet maintains its users’ cryptocurrencies. PlusToken claims to earn profits for its users through arbitrage. Based on the definition of “arbitrage,” in order for SmartDog to benefit from arbitrage transactions, SmartDog would have to transfer these cryptocurrencies from users’ wallets and trade them between different exchanges, which is one of the riskiest operations known in the cryptocurrency space and is prone to losing coins. PlusToken never explained how they could profit by arbitrage trading the user’s cryptocurrency while keeping it securely stored in the wallet. This does not make sense to anyone who has handled cryptocurrency or has experience in cryptocurrency trading. It is impossible to store cryptocurrency securely while sending it between exchanges for repeated transactions. The people behind PlusToken are not targeting experienced traders, they are targeting those who can be tricked into sending Bitcoin to their platform. “FOMO” (fear of missing out) is another popular term in the cryptocurrency field, which means fear of missing out. This emotion also applies to PlusToken . They explain to investors that opportunities to exploit cryptocurrency arbitrage trading will only appear for a short period of time, and that the cryptocurrency market will soon stabilize as more investor funds flow in, and then lose volatility, and there will be no big money to be made. This is great high-pressure marketing that creates the illusion in investors that they must act now or they will miss out! In order for PlusToken to attract the large numbers of people who would immediately take action and transfer money to their platform, as happened with OneCoin, Bitconnect, and countless other cryptocurrency scams, they must offer high returns to investors. Anyone who keeps $1,000 worth of cryptocurrency on the platform will receive returns of $60-180 per month, or $720-2,160 in the first year , paid out in PlusToken, its own digital currency. As with all other scams offering such high returns, these returns are not sustainable and cannot be reliably guaranteed by any trading robot, no matter how good it is. Whenever someone promises high returns, you should be wary of whether it is a "scam". However, these high returns happen to appear during the period when the cryptocurrency market is booming. Between early 2017 and mid-2018, when PlusToken was launched, the cryptocurrency bubble saw some investors multiply their investments hundreds of times. In this context, some people believe that monthly returns of 6%-18% are a safe or even modest guarantee. These promises also take place in the context of the multi-level pyramid schemes that have plagued China and Asia in the past few years. For the same investors, the returns offered by PlusToken are not bad for those eager to get rich, and it is also a lifeline for those who want to enter the seemingly difficult-to-enter cryptocurrency field. Thus, within a year of its launch, PlusToken has gone from being an unknown entity to a large platform with millions of users, each of whom has deposited at least $500 in the platform. It is estimated that by the time of its June 2019 collapse, PlusToken had funds from 3 to 4 million (perhaps more) investors on the platform. This rapid growth is partly due to their cunning marketing, which attracts crowds through so-called knowledge-popularization WeChat groups and high-pressure marketing campaigns; partly due to their high return promises and early redemptions; and partly due to investors' hope or greed. The point is, PlusToken delivered a return on investment early in its development and for a while everything seemed to be going well. Generous rewards and creative marketing PlusToken has set up an exciting reward structure for its referrals. All people need to do is invest at least $500 on the platform. If someone’s friend joins and invests $1,000, that person not only gets a share of their own money, but also an additional $60-180 for every person they refer. If he refers 10 people and each of them invests $1,000 on the platform, he can earn $600-1,800 from his referrals every month in addition to his own monthly investment income . As we have seen in multi-level MLM-based scams like OneCoin and Bitconnect, referral commissions are divided into several tiers. PlusToken will pay referral commissions to 10 levels of referrals. Investors can not only get paid from their direct referrals, but anyone whose direct referral brings in new investors will receive 10% of the new investor’s investment as a reward, with a pyramid structure of up to 10 levels. Even those who simply brought in their friends and family could earn more monthly income than they put in if they referred enough people. Some did question whether this was a Ponzi scheme, but the general consensus seemed to be that as long as the money kept coming in, everything was fine. The high referral rewards offered by PlusToken inspired some pretty aggressive marketing and lead generation. One person placed a PlusToken logo among vegetables in a supermarket, using it to tell YouTube followers that even supermarkets now accept PlusToken tokens. Presumably, the supermarket never found out about this. Astute investors, motivated by high commissions, also launched their own recruitment campaigns , disguising them as information-sharing campaigns to get everyone their friends and family knew to invest. In a short period of time, about 10,000 people were attracted to invest by their friends, family, followers and contacts, and the PlusToken platform brought in about $4 billion in additional funds. Some of them believed they could make a fortune on the platform without caring about how it worked. Many others thought they were really buying Bitcoin and other cryptocurrencies and believed they had found a safe way to store them in a decentralized wallet without researching how the platform worked or stopping to question the risks. PlusToken maintains the illusion that all the funds raised by the platform are used to develop wallets and exchanges in order to dominate the cryptocurrency market when the next bubble comes. The more actively investors promote PlusToken, the more rewards PlusToken will give them, and increase their rewards and praise according to their referral results. Members will be upgraded to highly sought-after titles based on their promotion results. “Big Boy” and “Big God” are the most popular titles given to the most outstanding recruiters. Everyone wants to reach these levels. As long as the investor continues to invest, the platform will keep paying until the investment stops. Secret encrypted information Only one year had passed since PlusToken was launched in June 2018, when investors began to complain about delays in their withdrawals in June 2019. Some people posted complaints on Chinese social media, saying that their withdrawal requests had been submitted for 35 hours but had not received any response. Soon, also in June, investors were no longer able to withdraw their funds. The PlusToken team initially tried to quell these complaints, saying the withdrawal problems were due to a hacker attack. A cryptocurrency transaction, such as sending Bitcoin to another address, shows details of its sending and receiving addresses, as well as how much money was sent. With Bitcoin and some other cryptocurrencies, it is possible to leave information in the transaction data. In the earliest Bitcoin Genesis Block, Satoshi Nakamoto (the anonymous creator of Bitcoin) left a message in the transaction: "The Chancellor is on the brink of a second round of emergency aid for banks, The Times reported on January 3, 2009." The creators of Bitcoin wanted to show the world that the digital currency was created in response to the failure and manipulation of the global banking system. While the founders of PlusToken were on the run, they were still trying to steal users’ cryptocurrencies from exchanges and send them to their own wallets on other exchanges. In the process of running away, PlusToken’s unknown founders left a message hidden in one of their transactions, in a similar style but without any of the elegance and kindness of Satoshi Nakamoto. The PlusToken team left a message: "Sorry, we ran away." Users lost a total of $4 billion, but the founders and the PlusToken team ran away. Prior to this, users had essentially watched their funds accumulate on the app without ever cashing them out. PlusToken charges a 5% transaction fee on any funds transferred out of an account, and with the added bonus of having the illusion that SmartDog could make more money, users seemed to have plenty of reasons to keep their crypto on the platform. The way PlusToken was built meant that investors had no control over the assets in their wallets. So when the founders exited, all users’ funds were suddenly locked up. All PlusToken contact points have disappeared. With no other options , more than 200 investors are pressuring authorities in Seoul, South Korea, to investigate what will soon be revealed to be a massive Ponzi scheme. South Korean authorities took appropriate action, launching a nationwide manhunt. For many people internationally, this was the first time they had heard of this fast-growing, largest scam in Asian history. If it were just people’s direct investments in the platform (totaling $6 billion), then the losses would stop there and no one else would be directly affected. However, the token has been driven up to $340 per coin by Chinese investors under the influence of FOMO sentiment, bringing the total market value of the project to $17 billion. If PlusToken is listed on the mainstream cryptocurrency information website CoinMarketCap, it will make it the third largest cryptocurrency in the world, but fortunately it is not. Although the identity of the PlusToken team and its founders remains a mystery, within days of the team’s escape, Chinese police, together with Vanuatu police, arrested six Chinese citizens in Vanuatu and extradited them back to China. While those arrested were all Chinese, the scam’s reach extended far beyond China. Investors from much of Asia, as well as Russia, Ukraine, Germany, and even Canada, suffered losses. PlusToken investors suffered heavy losses. However, the arrested person does not seem to be the mastermind. The PlusToken leader has never been caught. The project is allegedly led by a young Korean man named Leo , and apart from some strange photos, there are no further details . It is still unknown who is the real mastermind behind the $17 billion PlusToken scam. In every other cryptocurrency scam, it seems like the founders took the money. In PlusToken , it’s not clear who took the funds, and this is where the PlusToken story starts to get interesting. The raids on six suspects in Vanuatu should have given police some leads, but according to the police report, they did not. Cryptocurrency analysis firm Chainalysis has tracked down hundreds of millions of dollars worth of cryptocurrency held by investors who have lost access to the money, which is now completely controlled by PlusToken . One of the remarkable things about cryptocurrencies is that, with the exception of some privacy-focused cryptocurrencies that hide transactions, all transactions for most cryptocurrencies, such as Bitcoin and Ethereum, are publicly visible on the blockchain. This made it easy for cryptocurrency analytics firms to track digital assets associated with PlusToken wallets and notice if anyone moved the tokens. For onlookers, it is worth noting that the PlusToken sell-off has a direct correlation with the plunge in the price of Bitcoin and cryptocurrencies at different times since the project was halted in June 2019 . The total value of cryptocurrencies involved in the Plustoken case has exceeded a huge amount of RMB 15 billion.
On November 26, 2020, the Intermediate People's Court of Yancheng City, Jiangsu Province made a final judgment of the second instance in the PlusToken case, clearly ruling on the confiscation of all cryptocurrencies seized in the case, and the resulting funds and their increased value shall be turned over to the state treasury in accordance with the law.
According to the information disclosed in the judgment, during the investigation of the case, law enforcement agencies successfully seized a variety of cryptocurrencies including 194,775 bitcoins, 833,083 Ethereums, 1.4 million Litecoins, 27.6 million EOS, 74,167 DASH, 487 million XRP, 6 billion DOGE, 79,581 Bitcoin Cash (BCH) and 213,724 Tether (USDT).
In the end, the main organizer of the case was sentenced to criminal punishment in accordance with the law for serious illegal activities involving pyramid schemes and fraud. At the same time, all funds of the platform have been confiscated in accordance with the law.
The scam may have been stopped, but a lot of the stolen cryptocurrency is still unaccounted for and controlled by its ringleaders. They can still sell it at any time, further crashing the entire cryptocurrency market, which in turn affects everyone.
Second scam copied by the same team Another scam: A $1 billion copycat scam Just one month after PlusToken began, a new multi-level MLM cryptocurrency scam was born in China. WoToken bills itself as a smart cryptocurrency wallet that can earn high returns for its users without them having to do any work; they just need to invest some money and the platform will magically make them rich. While the returns are lower than PlusToken, it will be a scam to anyone except those accustomed to the yields promised by multi-level pyramid schemes, which have become common in parts of Asia. Those who invested $1,000 were promised daily returns of up to 0.5% and annual returns of up to 182.5%. Those who invested $5,000 or more were promised daily returns of up to 0.65% or annual returns of 237.25%. Given that annual returns above the single digits are considered high, these returns are essentially impossible to guarantee. Yet, as we have seen, scam after scam promises just that. Like PlusToken, WoToken claims that its users’ earnings come from algorithmic trading bots. Also like PlusToken, it has never managed to prove the existence of these bots. There are other similarities between the two, namely that it also offers generous referral commissions to its partners, which is a common practice in the crypto industry to leverage partners to bring in as many recipients as possible. WoToken also uses some pretty creative marketing techniques. The site claims to have partnered with Global Cash, a Mastercard-issuing company, which will allow their users to spend the cryptocurrencies they have stored in their WoToken wallets. To prove this, they have the word MasterCard on their website, but no MasterCard logo. Obviously, they have no partnership with MasterCard. In short, it looks and acts exactly like PlusToken. Thankfully, it took only a few months for Chinese police to catch on to the scam, and just over a year later, at the end of 2019, the scam was shut down after many investors began complaining about not being able to withdraw their funds. By the end of 2019, when the WoToken app ceased operations, it had defrauded more than $1 billion from 715,000 individual investors, using a "super-large multi-level pyramid scheme network" to siphon off investors' money. Less than two years after PlusToken collapsed, Chinese police dismantled a second, multi-billion dollar cryptocurrency Ponzi scheme that almost exactly copied PlusToken. Six people have been arrested and sentenced for this latest scam, whose ringleader appears to have come directly from PlusToken. It’s incredible that any criminal could pull off one scam of this magnitude, let alone two. In July 2020, after WoToken was shut down, 109 people were arrested in connection with the PlusToken case, including 82 key members of the scam and 27 people identified as core team members, all of whom were identified as major suspects. Based on the size and sophistication of the scam, there should be multiple people still at large. It is still unknown how many people are behind PlusToken and how much money they were able to defraud people of and keep. In August this year, a news report about Plustoken once again attracted widespread attention in the cryptocurrency market.
According to Lookonchain’s strict monitoring, a group of wallets that have been silent for 3.3 years have recently begun to transfer huge amounts of Ethereum (ETH) assets. The total amount of ETH involved may be as high as 789,533, which is equivalent to about US$2 billion.
Further on-chain tracking and analysis showed that the funds originated from a wallet called “Plus Token Ponzi 2”.
During 2020, the wallet stored a total of 789,533 ETH in thousands of different wallets, and has been silent since April 2021 with no record of any transaction activity.
The Latest Cryptocurrency Ponzi Scheme of the Year
On October 17, 2024, the U.S. Department of Justice announced that Juan Tacuri, the initiator of the Forcount cryptocurrency "Ponzi scheme", was sentenced to 20 years in prison.
In addition to being sentenced to 20 years in prison, Tacuri was also ordered to pay $3,610,718 in restitution and serve one year of supervised release after serving his sentence.
Prosecutors noted that Tacuri's fraud scheme targeted victims around the world, primarily in the Spanish-speaking community. The scam defrauded a large amount of funds from primarily Spanish-speaking investors around the world, causing huge losses to many investors.
The 240-month sentence imposed by Judge Analisa Torres represents the maximum sentence provided by the law, highlighting the U.S. judicial authorities' crackdown on scams in the cryptocurrency sector.
Perhaps, the scammers are repeating the tricks they learned with PlusToken. 
