Even though digital coin exists since the launch of Bitcoin in 2008, the idea of an online currency that doesn’t have support from a bank entity makes it a powerful tool for scams.
The last few years, when cryptocurrency started to get more attention, many smart criminals saw it as an opportunity to get the advantage of the trend. One of the most notorious scams in 2018-2019 was the PlusToken project, which caused a fall in the Bitcoin market in the Fall of 2019.
In May 2018, Plus Token appeared as a new token project for China and Korea, something that was getting very popular on those days.
The proposal of this project, similar to others in that time, was asking investors to support creating cryptocurrency-related items and promising rewards depending on the amounts they would invest. It offered a gain of 9% to 18% monthly of the inversion they made.
It also encouraged the investors to invite friends and family to join, giving additional prizes to those who achieved it.
The investors were organized in a 4 Tiers system, where the most investment and more people they convinced to join, the higher would be the wins.
The project seemed legal for more than a year. Earlier investors were able to see profits, which made them more eager to share the joy of the PlusToken to others, adding more and more people to the project.
Suddenly, in June 2019, investors started to notice that the money they asked for wasn’t coming. In the beginning, PlusToken sends responses blaming the high miners’ fees as the reason why the withdrawals weren’t happening.
During this time, those people that made top wins before with them believed the words, devoted their loyalty to a company that was, apparently, the real deal.
However, in August 2019, the founders of PlusToken made a withdrawal of 3 billion USD in Bitcoin, Ethereum, and other cryptocurrencies.
They disappeared, leaving a little phrase before doing it: “Sorry we have run”. This action not only affected the investors that were deeply involved with the project but also caused the different cryptocurrencies to lower their value and provoking a crash in the market. Bitcoin was greatly affected by this scam, making it difficult to go back up at first.
The PlusToken scam has its base on a known scam scheme called the Ponzi Scheme. The criminals create an unexisting product and offer it to a receptive audience, making it attractive, proving it works and that people will be getting their investments back when the first investors start to see results.
They need to promote and encourage investors to spread the word and get more investors. However, the truth is that the money they use to pay the early investors comes from the payment of the latest investors.
There is no real development; the scammers aren’t working the currency and make it gain benefits. They move the money they get from the latest investors, then get a part for them and finally use the rest to pay the early investors, making them believe that it is the profit of what they are doing.
Once that the scam can’t keep holding for itself (there are no new investors, or there are very few), the scammers take the money and flee, leaving a group of people that had trusted them in a bad situation.
The scammers played very well with the excitement of cryptocurrency, especially Bitcoin that was reaching very high numbers at that time.
They also knew how to promote themselves, making conferences and meetings with the target audience, exposing the project as legit and prosperous.
The most important feature for a scam to succeed is that they need to look and sound trustworthy. The criminals presented themselves as professionals, with the right words and the right look to gain the trust from the future investors.
They attended the customers’ doubts and made them feel secure that their money is in good hands. And when they start seeing that they are gaining profits, then the trust is complete, and the scam is thriving.
Once the scam was revealed by the founders, doing their disappearance act, the authorities started to investigate and look for the culprits. During July 2020, they announced that 82 of the people involved directly with the scam, and 27 possible suspects, were arrested.
In the early months of 2020, the accounts that belonged to PlusToken moved, dividing a significant amount of cryptocurrencies into smaller amounts, and sending them to different accounts. These movements could have helped them to track down those who were responsible for the scam.
Currently, even though a few months ago there were updates about the improves in the PlusToken app and promoting the PlusToken 3.0., it seems that it is the act of ringleaders that wants to keep up the hope for those who faced hard loses.
Although it looks like PlusToken will not be seen again soon, it doesn’t mean that there are no other platforms in the network with similar schemes.
It is necessary to study all the possible red flags of new token projects that don’t have a clear and well-explained plan of how investing on the project will increase the inversion.
Cryptocurrency exchange sites are starting to use tools like on-chain analytics tools that can help detect scams and frauds, and peer-to-peer platforms that would help the users to watch the transactions happening in real-time.
PlusToken was a well-oiled scam, and many innocent investors fell for it. This event helped to remind investors that they need to investigate deep on the new projects that appear now and then on the network, to be sure that it is legit.
All of these projects have the appearance of professionalism; however, it is best to double-check using the different tools at hand, and confirming that you understand the process they want to implement for gaining profits, before investing.
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