PlusToken scam has been cited as the reason behind the recent Bitcoin price drop after the perpetrators flooded the market with 13,000 Bitcoins worth $118 Million at the time. On March 7, the bitcoin price fell by $500 within a few hours raising questions about the probable cause of the sharp plunge.
The reason behind the crash was revealed on Twitter by ErgoBTC, a crypto analyst, who confirmed that PlusToken scam perpetrators had deposited about 13,000 bitcoins into mixing services. The deposits were made in multiple batches over a 24-hour period leading up to the flash crash.
~13k in new PlusToken mixer deposits in last 24 hrs.
Almost all previous mixer deposit change has entered mixing, confirming my theory.
Distributions still on/off. Much slower than September and November.
New report and full sit rep imminent. pic.twitter.com/vwrBuVk272
— ∴Ergo∴ (@ErgoBTC) March 6, 2020
Before the huge disposal, bitcoin was trading at around $9,200 and subsequently plummeted to $8,700 within a few hours.
The effects swept across the crypto market with the total market cap falling by over 5% within the same period. Both Ethereum and Litecoin lost around 6% while Tezos and Binance coin fell the most among the top 10 cryptocurrencies losing 9% and 8% respectively.
The market is till feeling the after effects as the price decline continues. At the time of writing, Bitcoin is trading at around $7,875.
Bitcoin mixing is a third party service that makes transactions anonymous by mixing identifiable coins with others before sending them out to the recipient address to obscure their trail. It is a commonly used cryptocurrency laundering service that eliminates traceability and compromises the transparency of the block explorer.
Mixers randomize transaction amounts and often add time delays to obscure the outputs. Mixer break the direct connection between the sender and recipient address as multiple transactions are tumbled together. This makes it impossible to trace the transactions through the block explorer.
Mixers also double up as exchanges allowing the users to convert their coins to other cryptocurrencies and send them to preferred addresses. Users can send their bitcoins to the mixing service and set up a recipient address to receive another set of ‘clean’ bitcoins. Users can also choose to receive their bitcoins equivalent in other cryptocurrencies like Ethereum to erase any links to the fraudulent address and coins.
Mixers do not subject their users to KYC compliance thus creating the perfect environment for illicit activities. As such, they are quite popular in the darknet and are generally considered illegal. This explains why the fraudulent team behind the PlusToken scam chose to use mixers to launder the proceeds of their criminal enterprise.
The recent disposal is not the first time the PlusToken scammers have dumped their crypto holdings in the market. The scammers usually split the digital assets in small portions for easy disposal. PlusToken was among the biggest crypto scams in 2019 defrauding investors over $2.9 billion. ErgoBTC noted that they have been randomly disposing their holdings in batches since August 2019.
One of the most significant disposals was in December 2019 when 790,000 Ethereum tokens worth around $105 million were sent from a PlusToken wallet to an address believed to be a mixing service. That disposal had devastating effects on the crypto market with over $12 billion wiped of the total market cap a few hours later.
The crypto market still awaits confirmation if the recent multimillion-bitcoin disposal is solely responsible for the sharp price decline. Still, large sections of the community believe that the occurrence is strongly related to the recent negative price action.
Image courtesy of Pixabay
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