Has the Chinese government sold the 190,000 bitcoins it held?
Colin Wu . 2024-07-09 . Data



Previously, Arkham claimed that in November 2020, Chinese authorities confiscated 194,775 bitcoins from the operators of the Ponzi scheme PlusToken. These tokens were seized and returned to the state treasury, but it is currently unclear whether China still holds these bitcoins or if they have been sold.

On November 26, 2020, the final judgment document for the PlusToken pyramid scheme case, which shocked the global cryptocurrency industry, was released.

A man from Changsha, Hunan, with only a middle school education, raised 310,000 bitcoins; 9.17 million ethers; more than 51 million EOS, etc. Its model was a very simple Ponzi scheme + pyramid scheme, raising funds and promising interest, with development of both upstream and downstream lines.

Most of the attention has been focused on the 190,000 bitcoins, 830,000 ethers, and 27.24 million EOS seized by the police. How this money was ultimately handled, the judgment document provides three statements:

First, part of the platform’s digital currency was seized from the defendants Chen Bo, Ding Zanqing, and Peng Yixuan.

Second, the evidence in the case confirmed that Chen Bo applied to the Yancheng Public Security Bureau to sell the seized digital currencies legally through Beijing Zhifan Technology Co., Ltd., with all proceeds to be used as restitution. The original court thus recognized that Chen Bo returned part of the funds and mitigated his punishment accordingly.

Third, the seized digital currencies were legally handled, with the funds and proceeds confiscated and turned over to the state treasury.

The seized assets mainly consist of two parts: the digital currencies raised by the platform and the illicit gains obtained by the defendants.

Criminal lawyer Huo Yijie told WuBlockchain that after the platform was recognized as a pyramid scheme organization, generally only the organizers and leaders are held criminally responsible, constituting the crime of organizing and leading pyramid schemes. In judicial practice, other participants are generally not recognized as criminal victims. Therefore, the illegal proceeds are confiscated and turned over to the state treasury.

Here, the well-known Beijing Zhifan Technology Co., Ltd. appears. The investors of this company include Huobi co-founder Yuan Dawei, Coldlar Wallet’s Yuan Dawei, and well-known crypto investors and Binance shareholders Chen Weixing.

Zhifan Technology is comparable to the well-known American institution Chainalysis, which mainly provides technical services for government blockchain and cryptocurrency regulation and is currently raising $100 million at a valuation of $1 billion. Similarly, Zhifan Technology had reportedly reached cooperation with public security departments in more than a dozen provinces and cities across the country by early 2019, with over 30 specific cases covering mainstream currencies such as BTC and ETH, involving tens of billions of yuan.

Both Jiang Zhuoer and WuBlockchain obtained similar information, confirming through communication with multiple OTC merchants that a large portion of these coins was sold between late 2019 and mid-2020 when BTC was priced between $7,000 and $12,000. The phrase “the funds and proceeds legally confiscated and turned over to the state treasury” in the judgment document somewhat corroborates this statement.

According to Document №228 of the 1986 Finance and Economics Department: The confiscated income handled or sentenced by the Administration for Industry and Commerce, the Public Security Bureau, the People’s Procuratorate, the People’s Court, and local state economic management departments are all turned over to the local finances. The local finance of Yancheng may have had substantial revenue. This might also be the motivation behind Yancheng’s crackdown on this industry. Refer to the previous crackdowns on PlusToken and miners for why Yancheng police severely crack down on the “pan/coin circle” .

Overseas, the PlusToken holding addresses have always been highly watched and discussed. Well-known trader light also stated that PlusToken entered Huobi in 2019 (after the arrest), and it now appears to have been sold.

However, overseas media and KOLs tracking addresses believe that most of the bitcoins were sold through Huobi, but it seems that there are still 15,000 BTC yet to be sold; additionally, overseas analysts generally believe that ETH addresses have not moved.

WuBlockchain’s comprehensive judgment believes that the addresses traced by the police do not completely match the addresses tracked overseas, and there are also addresses that the police are continuing to track. The document also emphasizes: the unreturned illicit gains from the relatives of the defendants and the unreturned funds and gains of each defendant will continue to be recovered by the Yancheng Public Security Bureau and turned over to the state treasury.

According to the document, the police verified that the platform held 310,000 bitcoins; 9.17 million ethers; more than 51 million EOS, etc., and recovered 190,000 bitcoins, 830,000 ethers, and 27.24 million EOS, etc.

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