The crypto market is going through a major selloff even while I am writing this post. Bitcoin went as low as $9.5k today and ethereum went below $180 at a point. The market has stabilized a little right now with Bitcoin back over $10k.
The selloff caused major panic leading to most other altcoins being sold. Heading over to Coin360 and you will be greeted with a sea of red.
In the past couple of weeks when the stocks market was getting increasing volatile, Bitcoin was doing rather well. In fact many has pointed out a positive correlation with physical gold. However, today's meltdown came despite a massive drop in major stock indices yesterday. Many are now asking why the sudden selloff?
China-based Ponzi Scheme
As many of us look to Crypto Twitter for answers, a potential explanation emerged. Dovey Wan from Primitive Crypto tweeted this.
According to Dovey, a Ponzi scheme named PlusToken, which had scammed investors of $3b, might be the cause of this massive crypto selling. She provided substantial evidence and a list of addresses that are linked to the Ponzi scheme operators. Alongside the addresses, Dovey has attached investigative data from security audit firm Peckshield that reveals the money flow from PlusToken’s wallet as of early July, the date the sell-offs are thought to have begun.
This to me is a very logical explanation of today's crash. If true, I believe it to be something just temporary. The story is still developing and I won't be surprised if large exchanges start to blacklist these addresses and prevent further selling.
Such Ponzi schemes have been giving crypto a bad name and now they are even causing a market panic. With Bitcoin ETFs decision coming in September and October, this isn't good news for the crypto community.