Chinese Authorities Allegedly Liquidate PlusToken’s Bitcoin Holdings
In a thought-provoking revelation, Ki Young Ju, the CEO and founder of CryptoQuant, has shared insights into the liquidation of a substantial amount of Bitcoin, initially associated with the infamous PlusToken scam. On January 23, Ju took to social media platform X (formerly known as Twitter) to express his observations:
Chinese Bitcoin Liquidation: Insights from Ki Young Ju
According to Ju, “China sold 194K Bitcoin already, in my opinion. PlusToken’s seized BTC in 2019 was sent to Chinese exchanges like Huobi. The Chinese Communist Party claimed it was ‘transferred to the national treasury’ without specifying if it was sold. It seems unlikely for a regime known for censorship to hold censorship-resistant currency.”
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He elaborated on the likelihood of these Bitcoins being sold: “The seized BTC from the PlusToken scam was mixed and sent to exchanges in 2019. Using mixers and multiple exchanges would be pointless if they didn’t intend to sell it.”
The Debate over PlusToken’s Bitcoin Holdings
This commentary highlights a broader debate surrounding the fate of the significant Bitcoin reserves confiscated by Chinese authorities. Despite the government’s assertion that these digital assets were “transferred to the national treasury,” clarity on whether they were sold or retained remains elusive. Ju’s analysis, however, suggests a large-scale liquidation might have been executed through local exchanges.
The PlusToken Scam: A Crypto Market Disruption
The PlusToken saga is a notable case of fraudulent crypto activities influencing market dynamics. In early 2019, PlusToken collected a substantial amount of Bitcoin—on-chain analysts estimated it constituted between 1% and 2% of the total circulating BTC at that time.
This scheme seemingly inflated demand artificially, propelling Bitcoin’s price from just over $3,000 to nearly $14,000 by mid-2019. During this period, investigators traced suspicious BTC flows linked to PlusToken addresses, raising concerns about potential market manipulation.
Market Impact and Institutional Involvement
Data, including screenshots shared by Ki Young Ju, indicate a rapid 300% price surge during Q1 and Q2 of 2019. This rise was partly fueled by PlusToken’s recruitment of naive investors, generating artificial buying pressure on Bitcoin.
Simultaneously, institutional interest in cryptocurrencies was growing, as exemplified by Fidelity’s advancements in custodial services. As PlusToken continued to amass Bitcoin, market analysts grew increasingly apprehensive about the impending threat of a significant sell-off.
Regulatory Scrutiny and Institutional Adoption
Throughout Q3 and Q4 of 2019, regulatory focus on crypto assets intensified, with guidelines and announcements from authorities like the SEC, CFTC, and FinCEN. Concurrently, new channels for institutional adoption emerged, highlighted by Bakkt’s introduction of regulated, physically settled Bitcoin futures.
However, the most significant on-chain narrative during this period centered on the second phase of the PlusToken saga. In July 2019, the scam’s Bitcoin reserves, which at their peak amounted to approximately 171,000 coins, began transferring to exchanges in large quantities.
The Aftermath: Impact on Bitcoin Price
Observers noted a rapid depletion of these reserves as tens of thousands of BTC were reportedly sold into the market, causing a price drop from nearly $14,000 to around $6,000 by year’s end. This widespread sell-off is recognized as one of the most significant “indirect liquidity attacks” on Bitcoin.
As of the latest reports, Bitcoin’s trading value stands at $103,111.
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