China seizes $3.2 billion in BTC – threat to Bitcoin’s upward trend?
The Chinese government has reportedly confiscated $4.2 billion worth of crypto-currencies. This includes 194,775 BTC worth $3.2 billion.
Although the volume is large, it can be argued that it is not really a big deal.
On 31 July, the local Chinese news channel CLS reported that the Chinese police had solved the „PlusToken“ fraud on the instructions of the Chinese Ministry of Public Security.
After 109 people were arrested, it was assumed that the police would Bitcoin Union scam seize the funds left over from the fraudulent operations.
Now reports have surfaced that the amount totalled $4.2 billion – including various crypto-currencies such as Ethereum and Ripples XRP.
Although the amount of crypto-currencies confiscated is massive, there are two main points to consider:
First, if China sells the seized crypto-currencies, it is likely to do so through an action such as the US seized „Silk Road“ coins, which would minimise direct selling pressure on Bitcoin in the immediate future.
Secondly, it could be argued that the arrest of the main perpetrators of the fraud probably means that the bulk of the funds have also been seized.
Considering that Bitcoin had already started to correct below $17,000 before the news was made public, it is unlikely that the seizure itself will have a massive impact on the market.
What needs to be considered
Alon Gal, the CTO of Hudson Rock, reports that funds seized by the Chinese police have not been moved for 100 days or more.
According to Gal, either the police have been in possession of the funds for a long time or have taken control of the private keys. Gal:
„The Chinese police claim to be in possession of $4,200,000,000 of the largest crypto-Ponzi ever (PlusToken), but I note that funds related to the Ponzi have not been moved for more than 100 days. Something is not right here. Either the police have the private keys and are REALLY sure that nobody who was responsible for the Ponzi has them and is in some exotic place outside China, or they could be lying. I’m not sure how the funds were confiscated, but not moved, unless they were stolen a long time ago.“
There is still great uncertainty about the seizure – and it remains to be seen what measures the Chinese police will take in the near future.