Emily Walker
Ki Young Ju, the CEO and founder of CryptoQuant, recently revealed that Chinese officials have likely sold a significant amount of Bitcoin linked to the PlusToken fraud scheme. On January 23, he shared his thoughts on X (formerly Twitter), saying:
“China has likely sold 194,000 Bitcoin. The BTC seized during the PlusToken investigation in 2019 was transferred to exchanges in China like Huobi. The CCP mentioned it was ‘moved to the national treasury’ but didn’t specify if it was sold. It seems unlikely that a government that censors would hold onto censorship-resistant assets.”
Ju elaborated further, indicating that the confiscated BTC had been mixed and dispatched to various exchanges in 2019. He argued, “There’s no reason for them to use mixers and multiple exchanges if they weren’t planning to sell it.”
These comments highlight an ongoing discussion about what has happened to the substantial Bitcoin seized by Chinese authorities back in 2019. While the government stated that these digital assets were “transferred to the national treasury,” it never clarified whether they were kept or sold. Ju believes the available evidence hints that a large-scale sale might have occurred through local exchanges.
Understanding the PlusToken Scandal
The PlusToken incident stands out as a significant instance of criminal activity influencing the cryptocurrency market. In early 2019, PlusToken gathered an enormous quantity of Bitcoin, with on-chain analysts estimating it represented 1% to 2% of the total circulating supply at that time.
The operation seemingly created a false surge in demand, propelling Bitcoin’s price from just above $3,000 to nearly $14,000 by mid-2019. During this period, investigators noted peculiar flows of Bitcoin through addresses associated with PlusToken, raising suspicions of potential market manipulation.
Supporting evidence from Ju’s analysis shows that in the first half of 2019, Bitcoin’s price increased by 300%. This spike was partially due to PlusToken recruiting unwitting investors, which generated artificial demand for Bitcoin.
At the same time, institutional interest in cryptocurrencies surged, highlighted by Fidelity entering the custodial services market. As PlusToken accumulated large quantities of Bitcoin, market analysts grew increasingly wary of the risk of a significant sell-off.
In the latter half of 2019, regulatory scrutiny of cryptocurrency assets intensified, reflected in announcements from the SEC, CFTC, FinCEN, and others. New opportunities for institutional involvement also arose, notably with Bakkt launching regulated, physically delivered Bitcoin futures.
However, the most significant event during this time was the second phase of the PlusToken narrative, when approximately 171,000 BTC began to transfer to exchanges in significant quantities starting July 2019.
As large amounts of Bitcoin were reportedly sold off, observers noticed a sharp drop in reserves, which contributed to Bitcoin’s price falling from around $14,000 to the mid-$6,000 range by the end of the year. This represented a major sell-off recognized as one of the most substantial “indirect liquidity attacks” on Bitcoin.
Currently, BTC is trading at $103,111.