PlusToken: A Fake Blockchain Wallet and Real Pyramid Scheme, Draining 40 Billion Yuan from 2 Million Victims

Who Gets Targeted

Most victims were small retail investors who had a superficial understanding of blockchain but were eager to get rich quick: individuals from third- and fourth-tier cities, retirees, stay-at-home moms, ordinary office workers recruited by friends and family, and even migrant workers who converted their savings into Bitcoin and Ethereum to deposit into the wallet. They generally lacked on-chain verification skills, could not distinguish between smart contracts and wallet private keys, and mistook 'deposit-to-earn, 10%-30% monthly returns' for the dividends of technological innovation. At the same time, trapped by chains of trust among acquaintances, they lowered their guard upon seeing profit screenshots shared by their uplines. Driven by the wishful thinking that 'getting in and out early means profit,' they added more funds, only to lose everything when the platform suspended withdrawals in June 2019, leaving many in debt or with broken families.

骗局怎么运作

• Step 1: Creating a halo of legitimacy. Starting in May 2018, the criminal group set up the PlusToken platform in Yancheng, Jiangsu, claiming it was launched by a South Korean blockchain research institute with founders who were former Samsung technical staff. They used slogans like 'The Alipay of Blockchain' and 'Smart Arbitrage,' using forged international team credentials to create an aura of technical authority, claiming it was 'built by former Google employees, using robots to automatically buy low and sell high on various exchanges.'
• Step 2: Setting an entry fee threshold. Participants were required to convert RMB into mainstream coins like Bitcoin or Ethereum and pay at least $500 worth of digital currency as an activation fee. Funds went directly into wallet addresses controlled by the group; while investors thought the coins were still in their accounts, the private keys and control had already been surrendered.
• Step 3: Promising static returns to bait investors. They claimed that deposited assets would earn 'Smart Dog' arbitrage returns of approximately 10% to 30% per month, promising that 1 million yuan could multiply several times over a year through compound interest. They used small, successful withdrawals by early members to create a facade of credibility, inducing further capital injections.
• Step 4: Building a dynamic multi-level referral hierarchy. They established a multi-level distribution system ranging from 'Ordinary Member' to 'Big Shot' and 'Master.' Uplines received commissions based on the deposits of their downlines. Returns could be settled across multiple levels, using 'direct referral bonuses, matching bonuses, and team bonuses' to incentivize members to aggressively recruit via WeChat groups and offline seminars, causing the membership to snowball to over 2 million.
• Step 5: Issuing their own token, PLUS, to create internal prosperity. The platform token, PLUS, was artificially inflated, and returns were settled in PLUS. They insisted it could be converted to mainstream coins at any time, but in reality, it was an 'air coin' used to delay the demand for real funds and mask the fact that no actual arbitrage was taking place.
• Step 6: Shutting down and absconding with assets. On the night of June 27, 2019, the platform announced 'system maintenance' and stopped withdrawals. The operators left a message saying, 'Sorry, we have run away.' The group fled overseas with massive amounts of Bitcoin and Ethereum, later laundering and selling them off in batches through mixers and OTC trades, which some on-chain analysts believe even suppressed the price of Bitcoin at the time.

红旗信号（看到这些快跑）

• 🚩 Promising stable, high returns of 10% to 30% per month without providing any auditable trading records; the so-called 'smart arbitrage' never left verifiable transaction trails on exchanges.
• 🚩 Returns are split into static gains and dynamic referral commissions, with commissions cascading through multiple levels—a classic pyramid scheme structure rather than a legitimate financial business.
• 🚩 Requiring the conversion of fiat currency into Bitcoin or Ethereum before depositing, deliberately bypassing the banking system to make fund flows difficult to track and recover.
• 🚩 The founding team's credentials cannot be verified; the so-called South Korean research institute and former Samsung executives exist only in promotional materials with no public employment records.
• 🚩 Returns are settled in the platform's own worthless tokens, which are traded only within the closed community and lack liquidity on mainstream exchanges.
• 🚩 Withdrawals are subject to review, limits, or delays under the guise of 'system maintenance.' The platform can unilaterally close withdrawal channels at any time, and users have no private key control over their assets.
• 🚩 Growth relies heavily on word-of-mouth in WeChat groups and offline 'get-rich-quick' seminars, with lecturers repeatedly instilling anxiety: 'You missed Bitcoin, don't miss this too.'

真实案例

• July 30, 2020, Ministry of Public Security announcement: Following unified command, public security organs investigated the PlusToken network pyramid scheme, arresting all 27 primary suspects who had fled abroad and 82 key members. This was the first major transnational network pyramid scheme case in China using digital currencies like Bitcoin as a medium, involving over 2 million members, a hierarchy of over 3,000 levels, and digital assets exceeding 40 billion yuan. (Source: https://www.panewslab.com/zh/articles/D28729016)
• September 2020, Yancheng Intermediate People's Court, Jiangsu Province, issued the first-instance verdict: The mastermind, Chen Bo, who only had a junior high school education, colluded with others to build the platform, illegally raising over 310,000 Bitcoins, 9.17 million Ethereums, and other massive digital assets. 16 individuals, including Chen, Ding, and Peng, were sentenced to prison terms ranging from two to eleven years for organizing and leading pyramid selling activities. (Source: https://www.sohu.com/a/905299899_121761025)
• According to a review by CCTV and other media in April 2021: On the night of June 27, 2019, the platform stopped withdrawals, and the operators left a message: 'Sorry, we have run away.' Many investors could not withdraw their assets that day. Some had invested millions in savings and were left only to comfort each other in victim support groups, with some falling into massive debt due to borrowing money to speculate on coins. (Source: https://www.sohu.com/a/905299899_121761025)

Official Stance

• July 30, 2020: The Ministry of Public Security held a press conference announcing the crackdown on the PlusToken transnational pyramid scheme, identifying it as a major pyramid crime in the digital currency sector and warning the public to stay away from virtual currency funds.
• November 2020: The Yancheng Intermediate People's Court, Jiangsu Province, released the final judgment for the PlusToken case, confirming that the platform used blockchain as a gimmick and digital currency as a medium to organize pyramid schemes, setting a judicial benchmark for similar cases.
• April 2021: CCTV and other central media reported on the 'high-interest bait plus multi-level commission' structure of the scam, reminding the public that so-called 'deposit-to-earn' wallets are essentially Ponzi schemes.
• June 2025: Multiple online platforms reposted a warning issued by cyber police and media regarding the PlusToken pyramid scheme, once again urging the public to be wary of financial projects that use blockchain as a wrapper, require entry fees in digital currency, and incentivize the recruitment of downlines.

How to Protect Yourself

• ✅ Treat any deposit-based investment promising fixed high returns as high-risk: Annualized returns far exceeding normal market levels mathematically depend on the capital of new entrants; reject these and exit such communities immediately.
• ✅ Identify the three features of pyramid schemes before paying: Any project that requires an entry fee, pays based on the number of recruits and hierarchy, and derives income primarily from new members rather than real business operations is illegal, regardless of the technology it claims to use. You can verify cases via the China Judgements Online website and Ministry of Public Security notices.
• ✅ Adhere to the principle of self-custody of private keys: Before transferring coins to any third-party wallet, ask yourself who holds the private keys. If a platform can unilaterally freeze withdrawals, your assets can be wiped out at any moment.
• ✅ Verify the authenticity of the team and technology: Use LinkedIn, GitHub, and block explorers to cross-verify the credentials of overseas experts and the transaction history of arbitrage addresses. Any 'halo' that cannot be verified should be treated as a forgery.
• ✅ If you have been scammed, stop losses and secure evidence immediately: Keep transaction hashes, chat logs, and promotional materials. Report the case to local public security authorities immediately and register the report receipt. Simultaneously, warn friends and family who are still recruiting to stop developing downlines to avoid becoming accomplices.
• ✅ Beware of rebranded versions: For any new chain wallets or quantitative arbitrage products appearing around 2026, compare them against the red flag list from this case. If they hit two or more, stay away.