Onecoin

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Onecoin is marketed as a virtual cryptocoin, based on Bitcoin and other cryptocurrencies, promoted by Onecoin Ltd, a Gibraltar company lead by Bulgarian Ruja Ignatova.[1]

The company and the scheme is on observation list of many authorities, among them are authorities in Bulgaria, Finland,[2][3][4] Sweden,[5] Norway[6] and Latvia.[7] Currently, none of the countries have declared Onecoin as criminal activity but authorities have warned of potential risks involved in business like Onecoin. On 30 September 2015 in Bulgaria, FSC (Financial Supervision Commission) also issued a warning of potential risks in new cryptocurrencies, giving Onecoin as an example.[8] After the warning Onecoin ceased all activity in Bulgaria and started to use banks in foreign countries to handle wire transfers from the investors.[citation needed]. In March, 2016, The Direct Selling Association in Norway warned against OneCoin, comparing it to a pyramid scheme [1]

The Onecoin Ltd claims that it is the fastest growing company in the world and claims to overtake Bitcoin within a year.[citation needed] though Bitcoin is not a company. Onecoin is not publicly traded or created, as the onecoin company is the single source of all such activity there is no established free market for onecoin, in contrast to bitcoin and other cryptocurrencies where multiple, independent, public exchanges exist establishing an open market for those currencies. Should onecoin become publicly traded it's price is indeterminate.

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 25,000 euros.[2] 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.[9] 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.[10]

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 to 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".[11] Onecoin is closed cryptocurrency and the mining is claimed to be done by the company itself with three servers, hence the claim of high amount of miners is strange. Also, it's yet to be seen what the claimed blockchain integration was supposed to be. 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.

Accusations of being a scam/Ponzi scheme

Onecoin has been accused of being 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.[12] In China, several members and investors of OneCoin were arrested in 2016 and huge amounts of money were seized.[13]

References

  1. 1.0 1.1 "Vil ikke være politi". Direktesalgsforbundet. Direktesalgsforbundet. Retrieved 25 March 2016. 
  2. 2.0 2.1 YLE (2016-03-14). "Finns investing millions in new virtual currency; police keeping tabs on case". 
  3. Poliisi (2015-04-11). "KRP ON SELVITTÄNYT ONECOIN-VIRTUAALIRAHAA" (in suomi). 
  4. Helsingin Sanomat (2015-11-04). "Krp ei aloita tutkintaa Onecoin-valuutasta – kehottaa silti erityiseen varovaisuuteen" (in Finnish). 
  5. Lotteri Inspektionen (2016-01-27). "OneCoins verksamhet polisanmält för misstänkt brott mot lotterilagen" (in Swedish). 
  6. direktesalgsforbundet.no (2016-03-03). "Vil ikke være politi" (in norsk bokmål). 
  7. "FKTK brīdina par OneCoin sniegtajiem pakalpojumiem" (in Latvian). 2016-03-11. 
  8. FSC (2015-09-30). "СЪОБЩЕНИЕ – OneCoin" (in Bulgarian). 
  9. Petteri Järvinen (2015-05-29). "OneCoin-koulutusmateriaali kopioitu kirjoista" (in suomi). 
  10. "OneCoin valtaa Aasiaa" (in Finnish). 2016-03-01. 
  11. "OneCoin - Uusi pyramidihuijaus? KRP: Rikosta voidaan arvioida luotettavasti vasta myöhemmin". 2016-03-02. Retrieved 2016-03-24. 
  12. Onecoin exposed as global MLM Ponzi scheme cointelepgraph.com. Retrieved 1 June 2016.
  13. http://behindmlm.com/companies/onecoin/chinese-authorities-investigating-onecoin-investors-arrested