Plus Token, a cryptocurrency Ponzi scheme disguised as a high-yield investment program that scammed billions worth of crypto assets has been actively moving XRP into exchanges in an attempt to cash out.
A well-disguised Ponzi
Plus Token offered massive rewards on “investment” to unsuspecting victims in China and Korea, especially among investors not familiar with cryptocurrencies. Plus Token maintained an illusion of sustainable business by pretending the funds were used to develop cryptocurrency-related products such as the PlusToken Wallet and Exchange. However, returns were generated by dividing more recent investments to pay off older members.
Platform administrators closed down the operation in June 2019. Fraudsters abandoned the scheme by withdrawing over billions of dollars worth of cryptocurrencies (Bitcoin, Ethereum, EOS, XRP, and others) and leaving the message “sorry we have run“.
While reports on the number of stolen funds vary, Chainalysis, a blockchain analysis company, gives the following numbers:
180,000 Bitcoin ($1.7 billion at the time of writing)
6,400,000 Ethereum ($1.5 billion at the time of writing)
111,000 USDT ($0.1 million at the time of writing)
Other sources report:
26 million EOS ($66 million at the time of writing)
485 million XRP ($91 million at the time of writing)
In the past, large price drops have been attributed to mass sales of these stolen funds.
XRP on the move
The XRP obtained by Plus Token, 484,775,570 XRP, were first held at r3C9BXmTtiDLhxH76cWP6vbyDEkbtxANzo. According to Thomas Silkjaer, CEO and founder of xrplorer.com, a resource for insights, analytics, and AML data, trying to prevent and combat fraudulent activity on the XRPL, the scammers have been actively moving their XRP to exchanges.
In a Twitter thread, he explained how large amounts of stolen XRP have been moving to exchanges in the past week. So far, almost 150 million XRP out of the total 485 million XRP has been moved to exchanges.
The funds are first shuffled between thousands of accounts before moving to exchanges like Huobi, HBTC, and OKEx, with HBTC receiving the majority of funds.
Course of action
The validators of the XRPL do not have the ability to interfere with any account, nor should they. Exchanges, on the other hand, have full control over the funds of their users. Conducting proper KYC checks is one step of unmasking the people behind these movements of funds. Most importantly, however, if there is evidence proving that these funds are the product of illicit activities, exchanges should act by rejecting these transfers or by freezing the assets.
While everyone in the crypto space is waiting for regulatory clarity, the importance of acting on illicit activity and protecting users should also be a top priority.