Cryptocurrency funds are running away

4 Jul, 2019 23:00
source: Tony Fu Hong Kong General Manager of Singularity Financial

After the skyrocketing and plummeting, Bitcoin price was close to $14,000 on June 27, and then fell below $10,000 on July 2, demonstrating the high risk of cryptocurrency. In late June, Bitcoin price rose from $8,000 to nearly $14,000, but selling pressure in recent days is getting violent. The running away of the well-known fund, PlusToken, is also one of the reasons for triggering this round of decline.

As the popularity of blockchain and Bitcoin rises, some fund owners used this opportunity to steal some attention, and mix their projects with other coins to confuse buyers, thereby fooling investors into the market. The current market generally lacks awareness of blockchain technology. As a result, many people just have a superficial knowledge on blockchain. Moreover, compared to traditional projects, the blockchain is considered as the “wind gap”, and the initiator of the fund can use this to hype. Some blockchain fund owners claim that their game rules are based on smart contracts, and the contract code is transparent, so is the process. This is very confusing. knowing the dangers of the fund, some people still choose to jump in, hoping with a fluke mind that “I will not be the last one.” Blockchain offers the soil for the funds grow strong, and greed and gambling addiction of human are the seeds that are cultivated deep into the soil and will germination in the future.

Against this backdrop, the PlusToken project is just one of many blockchain funding projects. From its establishment to the denial of money withdrawal in June 27, PlusToken spent more than a whole year. According to the promotion of the PlusToken project party, if the user saves a certain number of tokens (more than $500) in the wallet, he can gain 10% to 30% extra earnings through brick-moving function of the “smart day” in the wallet. The PlusToken account consists of four levels: the “rich”, “master”, “big god” and “great founder”. Each level can get extra rebates. As the blockchain surges up, over the past year, PlusToken wallets have swept across more than 100 countries, with more than 3 million users. Based on the rough estimate of the existing information, the sum involved in PlusToken case may be around RMB 20 billion. This round of running away of projects may be attributed to the rapid appreciation of Bitcoin, Ethereum and other cryptocurrency, resulting in the user running and the lack of cryptocurrency in the platform.

PlusToken is suspected of pyramid schemes

In fact, people with a little experience on cryptocurrency investment should understand that there is nearly no price difference between the cryptocurrency exchanges with good liquidity, and due to the great fluctuation in the price, it is very possible that the brick-moving won’t be able to earn back the handling fee. After users deposit their Ethereum into the account, they will be automatically transferred to an Ethereum wallet, and the wallet information on whether it will be used for “brick-moving” cannot be queried on the relevant browser. The above two simple factors can lead to the conclusion that such projects is not worth investment.

In fact, an industry insider said that the initial promotion of the fund usually often takes the family and friends of the seller as the first choice. Because the transaction is based on private contacts, investors have been hesitant to inform the local police station after knowing the running away of the platform. It is worth noting that the official website of the Hunan Provincial Local Financial Supervision Administration showed that in March 2019, the Wenyuan Police Station in Tianxin District of Changsha City had investigated and handled the local “PlusToken Blockchain Wallet” propaganda den. The police found that the “Plus Token Blockchain Wallet” was suspected of pyramid schemes.

I believe that the funding project in the name of “blockchain” has caused great damage to the image of blockchain industry, which will dampen the confidence of cryptocurrency investors. Today’s events should be the reminder for the regulatory authorities to immediately establish a regulatory system to avoid the damage to more investors’ rights; it is a mirror for investors, to urge them to see the whole picture before investing and not to seek profits blindly.