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Onecoin

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Onecoin is a Ponzi scheme that is marketed as a virtual cryptocoin, based on cryptocurrencies, with a private blockchain. It is promoted by Onecoin Ltd, an offshore Gibraltar company led by the Bulgarian Ruja Ignatova.[1]

Business model

Onecoin has been described as a Ponzi scheme, both because of how it has been set up and because of many of the people who are central to Onecoin having previously been involved in other such schemes.[2] In Hungary the Central Bank has issued a warning that Onecoin is a pyramid scheme.[3] And in China, several members and investors of OneCoin were arrested in 2016 and $30.8 million USD of assets were seized.[4]

In December of 2016, The Italian Antitrust Authority (Autorità Garante della Concorrenza e del Mercato) "adopted an interim injunction against the company One Network Services Ltd., active in the promotion and dissemination of cryptocurrency OneCoin...", and its representatives in Italy, describing their activities as an "illegal pyramid sales system" ("sistema di vendita piramidale vietato dalla legge"), and ordering them to cease promoting and selling Onecoin in Italy [5]

The British newspaper Mirror wrote that OneCoin / OneLife is a get-rich-quick scheme scam and a cult. Also Mirror has explained why OneCoin is worthless.[6] Bitcoin.com has given detailed evidence that Onecoin is an extensive ponzi scheme scam.[7]

The company and the scheme is on the observation lists of many authorities, among them are authorities in Bulgaria, Finland,[8][9][10] Sweden,[11] Norway[12] and Latvia.[13] Currently, none of the countries have declared Onecoin as criminal activity, but authorities have warned of potential risks involved in businesses like Onecoin. On 30 September 2015, Bulgaria's Financial Supervision Commission (FSC) issued a warning of potential risks in new cryptocurrencies, citing Onecoin as an example.[14] After the warning, Onecoin ceased all activity in Bulgaria and started to use banks in foreign countries to handle wire transfers from participants.[15] In March, 2016, The Direct Selling Association in Norway warned against Onecoin, comparing it to a pyramid scheme.[1]

Concept

According to Onecoin, its main business is selling educational material for trading. Members are able to buy educational packages ranging from 100 euros to 118,000 euros.[8] Each package includes "tokens" which can be assigned to "mine" Onecoins. Onecoin is said to be mined by servers at two sites in Bulgaria and one site in Hong Kong. Each level (except six and seven), or package, gives new educational material, which are copied from several sources.[16] The company and its recruiters claims that Onecoin doesn't sell cryptocurrency but only educational material. However, in a typical Onecoin recruiting meeting most of the time recruiters talk about investing in cryptocurrency and the educational material is barely even mentioned.[17]

The only way to exchange onecoins to any other currency is Onecoin Exchange, an internal market place for members who have invested more than just a starter package. Currently, onecoins can only be exchanged for euros, which are placed in a virtual wallet from which they can be requested for wire transfer. The market place has daily selling limits based on which packages the seller has invested in, which greatly limits the amount of onecoins which can be exchanged. On 1 March 2016, without a prior warning, Onecoin issued an internal notice that the market would be closed for two weeks for maintenance. The notice explained that the maintenance was necessary due to high amount of miners and for "better integration with blockchain".[18] On 15 March 2016, after the two week maintenance, the market opened again but no visible changes had been done; most of the transactions expire as before and daily limits stayed on.

References

  1. ^ a b "Vil ikke være politi". Direktesalgsforbundet. Direktesalgsforbundet. Retrieved 25 March 2016. 
  2. ^ cointelepgraph.com (2015-05-27). "Onecoin exposed as global MLM Ponzi scheme". 
  3. ^ "Fokozott kockázatot hordoznak a világhálón elérhető virtuális fizetőeszközök (in Hungarian)". www.mnb.hu. Retrieved 2016-12-22. 
  4. ^ behindmlm.com (2016-04-27). "Chinese authorities investigating OneCoin, investors arrested". 
  5. ^ "PS10550 - Vendite piramidali: sospesa in via cautelare la promozione della criptomoneta OneCoin". www.agcm.it. Retrieved 2016-12-30. 
  6. ^ "Who wants to be a OneCoin millionaire? YOU don't - here's why hyped-up web currency is virtually worthless". 
  7. ^ "Buyer Beware! The Definitive OneCoin Ponzi Exposé". 
  8. ^ a b YLE (2016-03-14). "Finns investing millions in new virtual currency; police keeping tabs on case". 
  9. ^ Poliisi (2015-04-11). "KRP ON SELVITTÄNYT ONECOIN-VIRTUAALIRAHAA" (in Finnish). 
  10. ^ Helsingin Sanomat (2015-11-04). "Krp ei aloita tutkintaa Onecoin-valuutasta – kehottaa silti erityiseen varovaisuuteen" (in Finnish). 
  11. ^ Lotteri Inspektionen (2016-01-27). "OneCoins verksamhet polisanmält för misstänkt brott mot lotterilagen" (in Swedish). 
  12. ^ direktesalgsforbundet.no (2016-03-03). "Vil ikke være politi" (in Norwegian). 
  13. ^ "FKTK brīdina par OneCoin sniegtajiem pakalpojumiem" (in Latvian). 2016-03-11. 
  14. ^ FSC (2015-09-30). "СЪОБЩЕНИЕ – OneCoin" (in Bulgarian). 
  15. ^ "OneCoin lose last bank account, unable to accept wires". behindmlm.com. Retrieved 2016-11-15. 
  16. ^ Petteri Järvinen (2015-05-29). "OneCoin-koulutusmateriaali kopioitu kirjoista" (in Finnish). 
  17. ^ "OneCoin valtaa Aasiaa" (in Finnish). 2016-03-01. 
  18. ^ "OneCoin - Uusi pyramidihuijaus? KRP: Rikosta voidaan arvioida luotettavasti vasta myöhemmin". 2016-03-02. Retrieved 2016-03-24. 
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