The Chinese government has reportedly seized $ 4.2 billion worth of cryptocurrencies. That includes 194,775 BTC worth $ 3.2 billion.
Even if the scope is large, it can be argued that it is not really a big deal.
On July 31st, the local Chinese news broadcaster CLS reported that the Chinese police had cleared up the “PlusToken” scam under orders from the Chinese Ministry of Public Security.
After 109 people were arrested, the police were believed to have confiscated funds left over from the fraudulent operations.
Now reports have surfaced that the total totaled $ 4.2 billion – including various cryptocurrencies such as Ethereum and Ripple’s XRP.
Although the amount of seized cryptocurrencies is massive, there are two main points to keep in mind:
- First: If China sells the seized cryptocurrencies, it will probably be through an action like the “Silk Road” coins seized by the US, which would minimize direct selling pressure on Bitcoin in the immediate future.
- Second, it could be argued that the arrest of the main masterminds of the fraud likely means that most of the funds have also been confiscated.
When you consider that Bitcoin began correcting below $ 17,000 before the news broke, the seizure itself is unlikely to have a massive impact on the market.
What to consider
Hudson Rock’s CTO Alon Gal said the funds seized by Chinese police had not been moved for 100 days or more.
According to Gal, either the police have long had the funds or have taken control of the private keys. Gal:
“Chinese police claim they have $ 4,200,000,000 in the greatest crypto-ponzi of all time (PlusToken), but I note that ponzi-related funds have not been moved for more than 100 days are. Something is wrong here. Either the police have the private keys and are REALLY sure that no one responsible for the ponzi has them and is in an exotic location outside of China, or they could be lying. I’m not sure how the funds were seized but not moved unless they were captured a long time ago. “
There is still a great deal of uncertainty surrounding the seizure – and it remains to be seen what action the Chinese police will take in the near future.
When you consider that the market hasn’t moved much since the incident became known, there seems to be a small immediate impact on crypto prices for now.