The recent decision of the Chinese government to offload a substantial amount of Ethereum onto the market has alarmed investors and analysts alike. In a significant move, around 7,000 Ethereum (ETH) tokens, valued at over $16.7 million, have been transferred from funds seized during the crackdown on the PlusToken scheme, a notorious multi-billion dollar Ponzi operation.
Despite this recent market activity, the wallet connected to the now-defunct PlusToken scam, dormant for nearly three years, still holds an impressive 542,000 ETH, equivalent to $1.3 billion.
This movement has triggered widespread concern, increasing selling pressure on Ethereum, and causing its value to drop into the $2,300 range. Notably, Ethereum has decreased by over 2% in the last 24 hours, reflecting a broader bearish market trend.
Impact of Ethereum Offloading by Chinese Government
In a recent disclosure, ErgoBTC, an analyst at OXT Research, reported in an X post that the Chinese government has activated the transfer of 7,000 ETH tokens from the PlusToken confiscated assets.
This move revealed that the wallets related to these seized funds had been quiet since 2021 until now. Post-transfer data shows that around 542,000 Ethereum tokens, valued at over $1.3 billion, continue to remain in the wallet.
Concerns are rife about a potential further decline in Ethereum’s price if the government proceeds with additional Ethereum sales.
In early August, the remnants of ETH seized from the multibillion dollar PlusToken scheme awoke on-chain for the first time since 2021.
Over the last 24h about 7k ETH of the remaining 542k ETH ($1.3b) was sent to exchanges indicating intent to begin selling the remaining tokens. pic.twitter.com/tu2o7y4o4L
— ∴FreeSamourai∴ (@ErgoBTC) October 9, 2024
PlusToken’s Shady Operations
Originating in 2018, PlusToken falsely marketed itself as a legitimate South Korean crypto exchange and digital wallet provider. Its operations masked a massive pyramid scheme that swindled millions from investors by promising high return accounts.
Between 2018 and 2019, PlusToken successfully defrauded over 2.6 million users, amassing approximately 194,000 Bitcoin and 830 Ethereum tokens.
As their fraudulent activities grew, Chinese authorities seized extensive assets, including Bitcoin and Ethereum, valued at approximately $14 billion. Over 100 individuals linked to the scam faced arrest.
In the period between 2019 and March 2020, nearly all seized Bitcoin, valued at around $1.3 billion, was liquidated by the government. Bitcoin’s market cap during this time reached about $160 billion.
However, the Ethereum holdings remained untouched until summer 2021, when a third of the 840,000 ETH was transferred to the Bidesk exchange and sold.
August 2024 saw activity in previously dormant accounts, with ErgoBTC noting the distribution of 542,000 ETH worth nearly $1.3 billion across 294 new addresses.
ErgoBTC commented: “Considering the new efforts to obscure the ETH, we might not have seen the last of the 540,000 ETH distribution initiated yesterday.”
Ethereum Price Fluctuations and Future Outlook
The impact of these substantial sales is already being felt in Ethereum’s market performance, with significant price drops anticipated. Currently, ETH has dipped below $2,400, reflecting recent bearish trends across the crypto market.
Per CoinMarketCap data, Ethereum currently trades around $2,395. The cryptocurrency has experienced sideways trading for over two months, struggling to break through $2,700 while finding support at $2,200.
Beyond Chinese government actions, other entities and individuals are selling off Ethereum. X user @RunnerXBT, noted that significant Ethereum holdings have been sold by the Ethereum Foundation and its co-founder, Vitalik Buterin. Meanwhile, Ether-based ETFs have seen a rise in net outflows.
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