![]() In March 2016, the Direct Selling Association in Norway warned against OneCoin, comparing it to a pyramid scheme. Authorities in many countries have warned of potential risks involved in businesses like OneCoin and undertaken prosecutions against persons linked to OneCoin, including CEO Ruja Ignatova and her brother Konstantin Ignatov. The company and the scheme is on the observation lists of many authorities among them are authorities in Bulgaria, Finland, Sweden, Norway and Latvia. In February 2016, the British newspaper Daily Mirror wrote that OneCoin / OneLife is a get-rich-quick scheme scam and a cult, calling it "virtually worthless". After the warning, OneCoin ceased all activity in Bulgaria and started to use banks in foreign countries to handle wire transfers from participants. On 30 September 2015, Bulgaria's Financial Supervision Commission (FSC) issued a warning of potential risks in new cryptocurrencies, citing OneCoin as an example. Legal issues and criticism The office of OneCoin in Sofia, Bulgaria, in 2016 2015 It was shut down again without notice in January 2017, though individuals affiliated with the company continued to accept funds. On 1 March 2016, without notice, OneCoin issued an internal notice that the marketplace would be closed for two weeks for maintenance, explaining that this was necessary due to the "high number of miners" and for "better integration with blockchain". The marketplace had daily selling limits based on which package the seller had invested in, greatly limiting the amount of OneCoins which could be exchanged. OneCoins could be exchanged for euros, which were placed in a "virtual wallet", from which they could request a wire transfer. The only way to exchange OneCoins for other currencies was the OneCoin Exchange ("xcoinx"), an internal marketplace for members who had invested more than a set amount. In typical OneCoin recruiting meetings, recruiters would focus on cryptocurrency investment, and the "educational material" was barely mentioned. Mining was said to be taking place at two sites in Bulgaria and one in Hong Kong. Investors also received "tokens" that could be assigned to mine OneCoins. According to a suit filed by former investors, much of the content in those packages was plagiarized from various free sources, including Wikipedia. It was not a decentralized cryptocurrency but rather a centralized currency hosted on OneCoin Ltd's servers.Īccording to OneCoin, its main business was selling educational material for cryptocurrency trading: investors could buy "educational packages" costing anywhere from 100 euros to 118,000 euros, or-according to one industry blog-225,500 euros. The total maximum sentence for the charges is 90 years in prison. In November 2019, Ignatov pleaded guilty to charges of money laundering and fraud. Greenwood was arrested in 2018, as was Konstantin Ignatov in March 2019. Most of the leaders have now disappeared or been arrested, though Ignatova has escaped arrest. Ignatova disappeared in 2017 near the time a secret US warrant was filed for her arrest and her brother, Konstantin Ignatov, took her position. In China, law enforcement recovered 1.7 billion yuan (US$267.5 million) while prosecuting 98 people. US prosecutors have alleged the scheme brought in approximately $4 billion worldwide. OneCoin was described by The Times as "one of the biggest scams in history". Many of those characters central to OneCoin had been previously involved in similar and different other schemes and business malpractices separate from each other. The company secretly conducted database entry scam simulating transactions not registered by an actual blockchain, and with no mining behind the apparent cryptocurrency release and circulation. It was also a pyramid scheme due to the recruiting of investors without providing any actual product. OneCoin is considered a Ponzi scheme due to its organisational structure of paying early investors using money obtained from newer ones. OneCoin is a fraudulent cryptocurrency scheme conducted by offshore companies OneCoin Ltd, based in Bulgaria and registered in Dubai, and OneLife Network Ltd (registered in Belize), both founded by Ruja Ignatova in concert with Sebastian Greenwood. OneCoin logo on the door of their office building in Sofia, Bulgaria, in 2016 Not to be confused with the Onecoin issued by Chinese company Xunlei.
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