Bolstered by the new coronavirus pandemic, scams continue to be rampant in the cryptocurrency world. From malware to fake investment programs and even fake donations to wellness organizations, scammers are known for taking advantage of desperate times and drastic people. One of the nigh prominent scams in the industry, PlusToken, has come under the spotlight again later rumours emerged that the March crash was caused by its operators selling their stolen Bitcoin (BTC).

According to research by Chainalysis, a blockchain analysis company, PlusToken did not cause the "Black Thursday" sell-off of March 12. In a recent webinar, Chainalysis sought to bring clarity to the affect of the COVID-19 pandemic on cryptocurrency markets past analyzing cardinal points in on-concatenation data such as exchange inflow and more.

During the presentation, Philip Gradwell, the master economist at Chainalysis, addressed a somewhat common opinion that the crypto marketplace crash that happened March 12 to March 13 was caused by PlusToken liquidating the Bitcoin acquired through its Ponzi scheme, which came to effectually $2.ix billion, according to Chainalysis. In the webinar, Gradwell stated:

"Nosotros can likewise dispel another theory that has been going effectually, that PlusToken [...] selling triggered the price turn down. We actually don't retrieve that'south the case because PlusToken had largely cashed out before early March."

According to Chainalysis information, PlusToken movements to exchanges decreased severely earlier the crash, which indicates funds were already cashed out. A noticeable amount of 12,423 Bitcoin, worth $123 million at the time, was moved to a mixer or common cold wallet on February. 12, followed by a like amount in early March. It's possible that the Bitcoin was cashed out immediately to avoid exchanges freezing funds.

Not the end for PlusToken

PlusToken may still have 61,229 Bitcoin, currently worth around $420 1000000, according to a report released past OXT Enquiry on March 10. While some Bitcoin has been sold later on the crash, low prices seem to discourage those behind PlusToken from selling, if they are still in fact holding such large quantities of Bitcoin. It'southward possible that the PlusToken operators may be waiting for the Bitcoin halving to capture a higher price.

According to Chainalysis, volumes prior to and during December 2022 were much higher than those observed in 2022. The accentuated inflows were discussed in another Chainalysis study where it took another opinion on the PlusToken and Bitcoin price relation, stating that at the time the sell-offs from PlusToken were keeping Bitcoin prices downwards.

Although PlusToken has largely cashed out, there is still a adventure it will go along to affect Bitcoin. According to Kim Grauer, the head of research at Chainalysis, a large sell-off past PlusToken could bring down the price of Bitcoin in the future, specially if liquidations are executed irresponsibly. She told Cointelegraph:

"We found in the past that large inflows to exchanges, such as those from PlusToken last year, tend to increase the toll volatility on exchanges. This trouble can potentially be exacerbated past trading bots that pick up on those on-chain movements and execute trades, non to mention the highly leveraged positions on derivatives exchanges that can go liquidated rather quickly. But overall, prices tend to bounce back quickly from those one-off events."

PlusToken: a crypto scam unicorn

PlusToken, now known as the biggest cryptocurrency go out scam in history — so far — was a 2022 Ponzi scheme that defrauded investors out of $2.9 billion in cryptocurrency assets by posing as a South korea-based crypto wallet projection that offered depositors involvement in crypto, a practise that has become fairly mutual in decentralized finance applications, centralized banking applications and exchanges offering margin trading.

PlusToken explained that its high involvement payments would be generated by substitution profits, mining and referral programs. Shortsighted by the promising gains, over 3 one thousand thousand users registered with PlusToken.The scheme even appear that it expected to grow to 10 million users by the end of 2022, shortly before information technology exited with depositors' coin.

Related: Crypto Leave Scams — How to Avoid Falling Victim

In China, PlusToken was quickly exposed every bit a Ponzi scheme when six individuals were arrested past Chinese authorities in June 2022, with reports connecting them to the PlusToken project. Cointelgraph reported on the incident at the time, only it was in August 2022 that the cybersecurity business firm CipherTrace released its second quarter Cryptocurrency Anti-Money Laundering Written report that confirmed the connection to the PlusToken scam.

COVID-nineteen: Crypto scams on the ascension

Involvement-generating products accept been gaining evermore popularity in the cryptosphere, including MakerDAO's decentralized protocol, which according to a written report by DappRadar saw peak activity during March, and other centralized options such as BlockFi's banking app or Binance's lending services. Although crypto has always been prone to illicit activeness and shady ventures, the relatively loftier interest rates practiced in these services may take helped normalize PlusToken'southward profit claims, easing unwary investors.

Similar models accept been seen elsewhere. In August 2022, a cryptocurrency wallet project from Nigeria called Satowallet allegedly made off with $1 million in a smaller-scale get out scam. Last year, another Ponzi scheme promising returns from cloud mining likewise made headlines after pulling off a $200 million leave scam that later resulted in 14 individuals being arrested.

An ever-increasing number of "topical" crypto-schemes have surfaced since the worsening of the coronavirus pandemic, from fake donation campaigns for the World Health Organization and the U.s.a. Centers for Disease Control and Prevention to fraudsters impersonating officials from these agencies who can sell data on agile infections for a price, paid with Bitcoin of course.

Now more ever, cryptocurrency holders need to exist wary of crypto scams. The U.Southward. Federal Agency of Investigations recently issued a press release in which information technology warned of the potential increase of "cryptocurrency-related fraud schemes" during the COVID-19 pandemic, adding:

"In that location are not but numerous virtual nugget service providers online but also thousands of cryptocurrency kiosks located throughout the earth which are exploited by criminals to facilitate their schemes. Many traditional financial crimes and money laundering schemes are now orchestrated via cryptocurrencies."

Although tough times create a perfect cluttered setting for scammers to operate in, information technology's relieving to know that despite the increased activity and novel coronavirus-related scams, revenue for crypto scammers savage past around xxx% in March.

Despite taking on new forms, cryptocurrency scams are about every bit onetime as crypto itself. For case, OneCoin — i of the near prominent names when it comes to cryptocurrency-related scams — was founded in 2022 and it is still making headlines in crypto media. Although OneCoin has been sued, the lead plaintiff for the ongoing $iv billion class-action suit against the projection, Donald Berdeaux, has repeatedly failed to see the court'south monthly status reports, which may atomic number 82 to the example existence dropped.

Can exchanges stop illicit transactions?

According to Chainalysis, most of the funds moved by the PlusToken scam were liquidated in two Asian exchanges: Huobi and OKEx. This has raised some concerns well-nigh exchanges' Know Your Client practices, which do non seem to have been useful when it came to spotting or censoring the transactions from PlusToken.

Although other sources were used, they were minor in comparison to the inflows to the aforementioned exchanges. Grauer stated that Chainalysis had "found traces of funds at mining pools, mixers, other scams, and p2p exchanges, merely the paths were too small to be interrogated."

If cryptocurrency schemes are to be stopped, exchanges should ideally human activity as a final barrier for illicit transactions. Responding to past criticism, Huobi is aiming to meliorate its security measures by launching Star Atlas, an on-chain monitoring tool that can identify "crimes similar fraud, coin, laundry and other problematic activities."

Moreover, Huobi is also looking to partner with data providers similar Chainalysis and CryptoCompare to build a more transparent and compliant ecosystem, a measure out that volition surely be essential for institutionalization and regulatory compliance going forward. Ciara Sun, the vice president of global business organization at Huobi, told Cointelegraph:

"While we may be able to identify illicit activities in one case they accomplish our exchanges and prevent their outflow, we can't even so prevent illicit transactions that kickoff outside of our platform. However, we believe that collaborative efforts amongst industry players, including but not limited to information sharing, are the primal to success to create a safer friendly ecosystem for the crypto manufacture to abound."

While efforts to reduce illicit transactions are being undertaken by exchanges such as Huobi and Paxful, users should always be aware of possible fraud attempts and conduct meaningful diligence into any projection they are willing to trust with their coins, equally it is unlikely they'll get them back in one case lost.