KYC on Exchanges Powerless Against PlusToken Ponzi Scammers According to New Report

Lucas Cacioli   Mar 12, 2020 04:00 3 Min Read

The PlusToken Ponzi scheme operators are using regulated KYC compliant exchanges to dump their cryptocurrency according to an updated report by investigative firm OXT Research.

In their first report on the PlusToken Ponzi scam, OXT Research introduced estimates for the size of the popular high yield investment scam and the depth of the market impact attributed to the accumulation and distribution of the PlusToken Bitcoin hoard - which is estimated to be an incredible 200,000 BTC.

PlusToken has been blamed for causing Bitcoin prices to fall in 2019 and as recently as March 6 when it was reported that the fraudsters had unloaded 13,000 BTC which sent the Bitcoin price plummeting by over $500.

The second edition report released on March 10, revealed the method used by PlusToken scammers to move their funds through regulated exchanges despite the strictly enforced Know Your Customer (KYC) compliance standards.

KYC Irrelevant

The report explained that the PlusToken scammers have moved their funds from the direct pile of unmixed allotments and locations to mixers like Wasabi wallet which implements a trustless coin shuffler, and then the funds would be consolidated and distributed.

While the first edition by OXT demonstrated that Huobi had been leveraged by the scammers for distribution the new edition found that while the global exchange was still the main source of distribution, a large amount of the coins have ended up on the OKEx exchange. Per the report, “OKEx is a newly labeled and significant coin destination having received nearly 50% of February distributions.”  

Both Huobi and the South Korean exchange OKEx are KYC compliant in line with the global push for increased transparency and regulation in cryptocurrency exchanges.

OXT stated the most of PlusToken’s major market effects should have passed as their data reveals that about 70% of their BTC stockpile has already been distributed.

BTC Price and Safe Haven Status

As reported by Blockchain.News, Bitcoin’s status as a safe-haven asset has been under intense scrutiny as the BTC price continues to fall amidst a series of crisis events in 2020 which have continued to create the ideal environment for the digital commodity to theoretically thrive. Beginning with the Iranian - US conflict in early Jan, the coronavirus outbreak triggering a cut in interest rates by the Federal Reserve, and now the plummeting oil price following a disagreement in Vienna between Russia and the OPEC nations.

The data in the OXT reports, highlighted that the Ponzi scheme has sold around $1.3 billion worth of BTC in the past seven months noting the distribution increases into market strength and slowing with market price weakness. The continual dumps by PlusToken scammers each time the BTC price has risen has added drastically to the cryptocurrency's volatility.

The market manipulation is frustrating as it is now an added variable for analysts to integrate into their inchoate analysis of the nascent asset and could be a huge factor into why Bitcoin has not met the expectations of its safe-haven status.


Image via Shutterstock

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