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Chinese police seized crypto assets worth $4.2B today from PlusToken Ponzi

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The PlusToken controversy, which has led to the arrest of 109 individuals so far, has also reportedly resulted in a titanic seizure of crypto assets by Chinese authorities worth $4.2 billion at today’s prices.

According to court filings released publicly on Nov. 19 and posted by The Block, authorities seized a staggering 194,775 Bitcoin (BTC), 833,083 Ether (ETH), 1.4 million Litecoin (LTC), 27.6 million EOS, 74,167 Dash, 487 million XRP, 6 billion Dogecoin (DOGE), 79,581 Bitcoin Cash (BCH) and 213,724 Tether (USDT) from seven individuals convicted in the case.

According to the ruling from the Yancheng Intermediate People’s Court, gains from the seized crypto assets will be forfeited to the national treasury. The precise details of how the assets will be dealt with and processed in accordance with national laws have not been fully spelled out.

The PlusToken scheme, which first released its white paper back in Feb. 2018, had presented itself as a South Korean crypto exchange and wallet provider that could provide users with interest-bearing accounts capable of generating between 8% and 16% returns monthly, with a minimum deposit of $500 in crypto assets.

According to local reports in Sept. 2020, PlusToken drew in 2 million members between May 2018 and June 2019.

The Yancheng Intermediate People’s Court puts the estimated figure of members at 2.6 million, and outlines that the scheme absorbed 314,000 BTC, 117,450 BCH, 96,023 Dash, 11 billion DOGE, 1.84 million LTC, 9 million ETH, 51 million EOS, and 928 million XRP by June 27, 2019.

At the time of their absorption, these funds were reportedly with close to 15 billion yuan — roughly $2.2 billion. In today’s bull market conditions, that value is significantly higher.

Some of the funds were used to incentivize members to recruit new targets, while some were cashed out for daily expenses and personal spending by the scheme’s ringleaders.

By summer 2019, the scheme had ceased operations, citing purported “system maintenance,” in what appears to have been one of the industry’s largest-ever exit scams. Chinese authorities closed in, arresting and/or detaining many of the key individuals involved. 

The Yancheng Intermediate People’s Court ruling notes that 15 individuals have been convicted to date, and have been sentenced to between two and 11 years in jail, with fines ranging between $100,000 and $1 million.

Additional reporting by Ting Peng



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New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.