A Chinese court in the Eastern province of Jiangsu has slapped the ringleaders of the PlusToken Ponzi scheme with 11 years of prison after they made off with cryptocurrencies worth 14.8 billion yuan, which translates to approximately $2.25 billion from investors.
One of the biggest Ponzi schemes in China
PlusToken has set the record of being one of the biggest uncovered Ponzi scams in China. Emerging in mid-2019, it expanded to over 3,000 pyramid scheme layers after targeting more than 2 million investors in the country.
Nevertheless, it caused a wide-range of panic after some Korean and Chinese investors could not withdraw Bitcoin funds from their wallets. However, this issue was dismissed as a mere hacker attack.
The Ponzi scheme lured victims with lucrative crypto investments and promised high returns based on the investment amounts and the members they recruited. Payments were channeled through cryptocurrencies like Bitcoin, and this was a classic example of a Ponzi scheme where returns for earlier investors were generated from those who joined later.
In July, 27 primary criminal suspects involved in this scam were arrested by Chinese authorities. It served as the first online Bitcoin pyramid scheme to be flagged down by Chinese security organizations.
The promise of arbitrage returns
Per the report:
“After PlusToken went bust in mid-2019, and Chinese authorities started chasing its ringleaders domestically and abroad, the price of bitcoin plunged almost 30 percent from its highest price of the year, to about US$10,000 per coin.”
It was also revealed that the masterminds deceived investors with arbitrage returns, which proved to be non-existent.
The announcement of this imprisonment sentence comes days after Colin Wu, a Chinese cryptocurrency and blockchain journalist, disclosed that the huge amounts of Bitcoin (BTC) and Ethereum (ETH) seized by the Chinese government from the PlusToken Scam had been converted to fiat currency and reserved in the Central Treasury managed by China’s central bank.