PlusToken’s $1.3 Billion Ethereum Dump: A New Threat to Crypto Prices

Ethereum (ETH) faces market uncertainty as$1.3 billion worth of ETH linked to the PlusToken Ponzi scheme is moving to exchanges.

Reports indicate a portion of the massive 542,000 ETH seized from PlusToken has already reached significant exchanges, including BitGet, Binance, and OKX.

This development has sparked a drop in Ethereum prices, raising fears of further sell-offs. The crypto community remains concerned about the impact of this large-scale liquidation on the market.

PlusToken Ponzi: A Massive Crypto Fraud Unveiled

The PlusToken Ponzi scheme was one of the largest crypto frauds, operating between 2018 and 2019. According to a report, the fraudulent scheme lured millions of investors with promises of high returns and eventually collapsed.

PlusToken attracted over 2.6 million participants, amassing vast amounts of Bitcoin (BTC), Ethereum (ETH), and other cryptocurrencies.

When the scheme was dismantled, Chinese authorities seized more than 833,000 ETH and 194,000 BTC from PlusToken wallets.

According to a court report, the seized assets were handed over to Zhifan Technology in Beijing for liquidation. Authorities intended to use the liquidated funds to compensate the Ponzi scheme victims.

Later in 2020, a court document reported that the confiscated assets had been turned over to Beijing Zhifan Technology Co for conversion to cash with proceeds to be used as restitution. https://t.co/J3VDiCEZ7E pic.twitter.com/WpyGa7GNBP

- FreeSamourai (@ErgoBTC) October 9, 2024

The sale of these massive holdings has negatively affected the crypto market in the past. This precedent has led to concerns that a similar sell-off of ETH could create downward pressure on its price.

$1.3 Billion in Ethereum Hits Exchanges

The crypto monitoring group FreeSamourai recently observed that 7,000 of the 542,000 ETH linked to PlusToken had been transferred to crypto exchanges. These movements suggest that the authorities are preparing to liquidate the remaining ETH, which has caused market fears.

In early August, the remnants of ETH seized from the multibillion dollar PlusToken scheme awoke on-chain for the first time since 2021.

Over the last 24h about 7k ETH of the remaining 542k ETH ($1.3b) was sent to exchanges indicating intent to begin selling the remaining tokens. pic.twitter.com/tu2o7y4o4L

- FreeSamourai (@ErgoBTC) October 9, 2024

Ethereum's price has dropped slightly by 1.47% over the past 24 hours and is trading around $2,400. The potential for further sell-offs looms large, as a significant portion of the ETH is still waiting to hit the market.

In a different X post, FreeSamourai reported that another 15,700 ETH was recently moved from a PlusToken-linked wallet. However, this amount has yet to be deposited on crypto exchanges.

Yesterday, 15.7k ETH was transferred out of these last known addresses, reentering a similar attempted mixing process used in 2020 and 2021.

Of the 15.7k ETH, just over 7k ETH was sent to a handful of exchange deposit addresses. pic.twitter.com/K5LF6jODqM

- FreeSamourai (@ErgoBTC) October 9, 2024

FreeSamurai believes this new movement of Ethereum is a signal of more to come. Given the recent effort to re-obfuscate the ETH, it is unlikely that this is the last of the 540,000 ETH supply distribution," FreeSamourai said in a report.

Given the recent effort to re-obfuscate the ETH it is unlikely that the active distribution of the 15.7k ETH moved yesterday is the last of the 540k ETH supply distribution.

- FreeSamourai (@ErgoBTC) October 9, 2024

This has further fueled concerns about how much of the seized ETH could flood the market.

Whenever large amounts of cryptocurrency are sold, panic selling often ensues, driving down market prices. Past sell-offs from government authorities have had a similar effect.

For example, the German government's liquidation of $3 billion in Bitcoin in July led to a price drop from $65,600 to $57,800. Additionally, the recent decision by the U.S. Supreme Court to permit the sale of 69,370 BTC seized from the Silk Road.

The U.S. Supreme Court decided not to review the case about who owns this BTC. So, the U.S. government could sell these coins. In the case of Ethereum, the ongoing movement of funds related to PlusToken has left many investors worried.

One investor said, Potentially $1.3 billion sell pressure on ETH from PlusToken and $4 billion on BTC from the U.S. Gov's Silk Road sales. This is why we can't have nice things."

This is why we cant have nice things.
Potentially $1.3b sell pressure on $ETH from PlusToken
Potentially $4b sell pressure on $BTC from the US Gov's silk road sales. Sadge. https://t.co/DZsiG9hhZl

- CryptoCondom (@crypto_condom) October 9, 2024

The fear of another significant sell-off is accurate, and the consequences could ripple through the entire crypto ecosystem.

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