China’s Handling of Bitcoin Seized During the 2019 PlusToken Ponzi Scheme Remains Under Scrutiny

New evidence suggests the cryptocurrency was sold. Blockchain analysis reveals that 194,000 Bitcoin tokens confiscated by Chinese authorities were likely laundered through mixers and liquidated via exchanges like Huobi.

China’s handling of Bitcoin (BTC) seized during the 2019 PlusToken Ponzi scheme is back in the spotlight, with new evidence suggesting the cryptocurrency was sold.

According to blockchain analysis, 194,000 Bitcoin tokens confiscated by Chinese authorities were likely laundered through mixers and liquidated via exchanges like Huobi.

The PlusToken scam, which ranks among the largest Ponzi schemes in cryptocurrency history, defrauded investors of over $2 billion. While Chinese authorities reported transferring the seized Bitcoin to the “national treasury,” no further disclosures were made about its fate.

Now, blockchain data reveals significant Bitcoin outflows from PlusToken-associated wallets to exchanges in 2019, coinciding with the seizure of the 194,000 Bitcoin by Chinese authorities.

Ki Young Ju, the CEO of CryptoQuant, suggests the assets were likely sold, stating, “There’s no point in using mixers and multiple exchanges if they didn't sell it.”

This raises questions about reports indicating that China is among the leading governments holding Bitcoin. If they sold the 194,000 BTC, how much do they still have?

Notably, charts shared by Valkyrie Investments and CryptoQuant show a sharp rise in Bitcoin inflows to exchanges during 2019, which aligns with observed price fluctuations. Analysts believe the liquidation of PlusToken reserves increased selling pressure, contributing to market instability.

The PlusToken era left a lasting mark on the cryptocurrency market. Metrics like “Bitcoin CoinDays Destroyed,” which tracks the movement of older Bitcoin, spiked in late 2019, corresponding with intense selling activity. This hindered Bitcoin’s recovery from the 2018 bear market.

Large-scale Bitcoin movements are known to influence market trends. In 2017, speculative behavior fueled a bubble, while liquidations, like those tied to PlusToken, worsened subsequent price declines.