Suspected pyramid scheme allegedly selling large amounts of crypto – may have caused bitcoin price drop
Aug 15, 2019
In recent days, the bitcoin price has dropped significantly, and right now the price of the world’s biggest cryptocurrency is below $10,000.
What this is due to is uncertain, but the downturn has surprised many because the stock market has also fallen, and bitcoin is usually seen as a safe haven when this happens.
Now a Chinese-American venture capitalist has a theory that could be a clue to understanding bitcoin’s price decline.
Allegedly stole $3 billion
Dovey Wan writes on Twitter that the Chinese suspected pyramid scheme Plus Token has sold off parts of its holdings on the world’s crypto exchanges in recent days.
She believes that Plus Token, in China and South Korea in particular, has been stealing the equivalent of $3 billion – and that they are currently selling the money in bitcoin and ethereum.
Bitcoin’s total market value is approximately $178 billion, according to numbers from Coinmarketcap. This means that if Plus Token were to sell all its money in bitcoin, more than one and a half percent of the total value of the cryptocurrency would be moved. This, in turn, could have a major negative impact on the price.
A classic pyramid scheme
Plus Token allegedly have stolen the money by claiming that investors would make guaranteed profits in a multi-level system – a classic pyramid scheme, that is.
According to Dovey Wan, the sale is made by placing smaller amounts on the crypto exchanges, which makes it more difficult to discover who is behind the transactions.
Arrested on Vanuatu
According to an article in the Chinese newspaper Odaily, six Chinese nationals who were involved in the scam have been arrested on the southern island of Vanuatu and have been handed over to the Chinese police. But despite the fact that several of the culprits are in police custody, the allegedly stolen cryptocurrencies seem to be sold off successively.
According to the same report, over 100,000 people have been tricked into the scam. That may seem like a lot, but Plus Token themselves said that it had over ten million members in early 2019, Cointelegraph reports.