ONECOIN: PERHAPS THE BIGGEST CRYPTO PONZI-SCHEME EVER!

OneCoin The biggest Crypto Ponzi-scheme ever OneCoin The biggest Crypto Ponzi-scheme ever

There are only rumors about the amount of the total funds invested in the OneCoin/OneLife system. But with this Ponzi-scheme having been active since 2014 in more than 190 countries worldwide and supposedly having more than 3,5 million members out there, we assume that the OneCoin scheme by far exceeds the Bitconnect fraud. OneLife members are supposedly holding about 60 billion OneCoins. According to the self-set value of the coin – 25.1 USD (20,75 Euros) per coin today – the resulting market capitalization exceeds USD 72,6 billion.


The Fundamentals about OneCoin

It’s one of the oldest Crypto-MLM schemes, started in June 2014 as the amalgamation of several experienced old MLM boys like Sebastian Greenwood and Nigel Allan. Ruja IGNATOVA –  a Bulgarian national, grown up and educated in Germany – took over the leader position early in 2015.

Ruja Ignatova
Ruja Ignatova – the OneCoin Principal

Ruja IGNATOVA’s business model is based on OneCoin – allegedly a sort of cryptocurrency, advertised as the improved bitcoin version and the future of money – and the MLM network OneLife. Actually, the MLM distributors of the OneLive network do not sell OneCoins. They sell educational (training) material with the tempting promise to make OneLife members ready for their future fortune with OneCoins.

For each of the training packages of the OneAcademy program,  so-called tokens – they call them OneCoin points – are issued in different quantities free of charge. Prices for purchasing the “Initial Launch Pack” range from EURO 150, up to the most expensive packages with a price of EURO 55.555 (prices changed frequently). The points received could be used for the mining of the real OneCoins. For each recruitment of a new affiliate who spends money on an educational material package, OneCoins are received.

The Fraudsters’ “Success Story”

In late 2015 the organization gained a massive momentum with an aggressive marketing strategy – pretending that the cryptocurrency was being utilized by millions of people worldwide – on all fronts. Putting aside its extensive online as well as event marketing efforts, the company had enlisted a large army of multi-level affiliate marketers to recruit new members/affiliates, who could then work their way up the ranks by bringing in even more new investors. That’s called a pyramid scheme, right? The tactic, employed the promoters across multiple online and offline channels, essentially involved ballyhooing the investment by touting screenshots of the impressive “profits and wealth” OneCoin has brought them; that is despite the fact that most of their winnings came from affiliates – not investing.

Right from the beginning, OneCoin worked on a worldwide basis.

OneCoin
OneCoin

According to their leadership, their reach extends to 190 countries with China, Japan, Thailand, Korea, and Vietnam being the leading spenders on the coin. Asia represented more than two out of every three buyers in OneCoin in 2015/2016.

The troubles started end 2015

On 30 September 2015, Bulgaria’s Financial Supervision Commission (FSC) was the first regulatory authority to issue an investor warning regarding OneCoin. After the warning, OneCoin ceased all activities in Bulgaria and started to use banks in foreign countries to handle wire transfers from members.

When OneCoins failed to hire Bjorn Bjercke,  a blockchain developer, in an effort to recruit him as Chief Technology Officer (with a supposed pay of $2.5M per year) it got public in 2016 that OneCoin has never been mining coins but have been using anMS SQL server where they have been scripting coin creation. So it got evident that the better version of Bitcoin does not have a Blockchain.

In January 2017 OneCoin closed down xCoinx. Up to then xCoinx, an internal marketplace for members who had invested more than just own starter package was the only possibility to enable OneCoin holder to exchange OneCoins to fiat money.

The closing down of xCoinx probably resulted from the high self-set internal value of the Token with 7.9 EUR, with the OneCoin organization no longer willing to honor the OneCoin points of the affiliates at that high price.

Instead, the affiliates were promised a cash out as soon as the Initial Public Offering would take place (announced for the second quarter of 2018). Ignatova strongly encouraged the affiliates to convert their OneCoin points into OFC virtual shares. An OFC is a future certificate that entitles you to receive shares in the.

Dealshaker snapshot
Dealshaker snapshot

 

Up to the promised Initial Public Offering, the only possibility to make use of the OneCoin Tokens is the internal online marketplace www.dealshaker.com, which opened up in February 2017.  This marketplace provides a possibility to exchange the onecoins for products and services offered by other OneCoin members.

Very soon afterward it got evident that the dealshaker marketplace massively has fallen short of its expectation.

Regulatory authorities started to investigate

Probably shortly after the announcement of the shut down of xCoinx the big distributors started to leave the system and to look out for new fraudulent activities (we will report on this later on). The leaders of the system also started to distance themselves from the scam.

Starting in 2016 the authorities acted globally to act against the system represented by Onecoin Ltd (Dubai), OneLife Network Ltd (Belize) and One Network Services Ltd (Sofia/Bulgaria) and hundreds of associated companies on 4 continents (as expressed by a Bulgarian police report):

The British Financial Conduct Authority has warned the general public to refrain from trading OneCoin for fiat or other digital currencies back in September 2016.

A representative was charged with fraud in Kazakhstan in May 2017. In India, the police arrested 23 people in connection with the pyramid scheme of OneCoin in July 2017. Ruja Ignatova- CEO on July 10, 2017, was charged in India with duping investors as a part of an Indian investigation. The investigation recovered illicit financial flows of about $3.77 million USD while $11.52 million USD had already been transferred out by the promoters to avoid further clampdown.

In August 2017  the Italian Antitrust and Consumer Protection Authority (AGCM) classified OneCoin as a Ponzi scheme and imposed a fine of €2.5 million on the company.

In May 2018 the prosecutor in China said that the scheme involved up to 2 million victims, while the amount of capital received from investors totals as much as 15 billion yuan (around 2 billion USD). Nearly 1.7 billion yuan (266 million USD) has been recovered.

On 17 and 18 January 2018, the offices of the scam in Sofia, Bulgaria, were searched and the servers seized. The search was ordered by the Public Prosecutor’s Office in Bielefeld and carried out by employees of the Bulgarian Criminal Prosecution Service and European Union Crime Fighting Units.

Countries that have banned all foreign exchange transactions related to Onecoin include the Central Bank of Samoa, Belize, Italy, Hungary, Nigeria (estimates for N10billion (20m EURO investments exist), Bulgaria.

Other countries that have placed Onecoin on its observation list include: Finland, Sweden, Norway, Thailand, and Latvia.

Countries that are investigating companies in association with Onecoin are: under investigation in Austria, Germany, England, Ireland, Italy, the United States, Canada, Ukraine, Lithuania, Latvia, Estonia, and many other countries.

The Zombie-Scam is still active

By now Ruja Ignatova disappeared. Rumors are that she left Europe. Her brother Konstantin Ignatov is supposedly running the show.

The OneLife sales force is still active in South America and Africa, attracting the poorest of the poor with promises of a golden future. Ponzi schemes across the world regard Africa especially Nigeria as a viable market for technology-based financial ponzis and schemes. This is mainly due to the attributes of developing country status where financial literacy is low manifesting into lack of financial depth and awareness hence creating an enabling environment for Ponzi schemes.

Downplaying the legal threats, the promoters stick to the script and continue to make false promises. Unfortunately, none of these warning signals seemed to have instilled a sense of doubt in the minds of the numerous investors. The regulatory authorities in Africa and South America have also started to react to the threat of the Ponzi-scheme. On 3 May 2018, the Central Bank of Samoa (CBS) banned all foreign exchange transactions related to OneCoin and OneLife.  The bank had earlier in March issued a warning about OneCoin. CBS describes OneCoin as a very high-risk pyramid scheme.

ICO to replace the IPO

There are still members who are clinging to the hope of OneCoin going public and thus the imaginary value of the coin would magically turn into reality. One fact that they comfortable seem to forget is that it isn’t relevant whether there are hundreds of thousands or 3,5 million members believing in the lie. There will be no new investors to bail them out from their misery.

During summer 2018 it got evident that the IPO won’t take place but the project now published plans to do an ICO. (Fintelegram already reported about that).

Our take on this fraudulent system

It is unbelievable how long this evident Ponzi-scheme survived resp. is still surviving and it also shows the shortcomings and limitations of the regulatory authorities split all over the world and evidently not working together to trace these fraudsters and bring them to jail.