Money Stolen: $2,500,000,000+
Investors Suffered: —
The fraud activity had not been invented yesterday, but with the advent of a new technology era and blockchain-based applications, it’s all came on entirely another level. Check up our exciting story about how one East-European scam startup had almost taken over the planet.
Cryptocurrencies have revolutionized the way the world views financial transactions, but they have also contributed to the emergence of scams in this area. While honest and intelligent people are using blockchain technology and crypto to create the project that changes the world in a better way, the countless scammers are waiting for their chance to cheat investors and get their slice of pie.
Given that there is no 100% guarantee that the ICO will succeed, investors simply believe in the project when they part with their money. This, of course, led to the emergence of many scams over time.
Let’s start from getting the idea of what the Ponzi scheme is in our minds?
A Ponzi scheme is a fraudulent investment operation – it’s operator e generates returns for older investors through giving them revenue which has been paid by new investors, instead of through legitimate business activities – such as trading, etc.
Speaking frankly, the new investors which are attracted to the scheme, give away the money to those who managed to invest before, and the cycle goes on and on. The top problem with Ponzi schemes at large is that companies that run them spend their time focussing on attracting new clients and investors. Eventually, when the revenue stream runs out, the scheme falls apart and countless people lose money as result.
The scheme is named after Charles Ponzi – the one who became infamous back in the 1920s. This person became rich just during the night, having established the scheme that was based on the arbitrage of international reply coupons for postage stamps, and later he diverted the money of investors to pay himself, and the ones who were at the very core of this frau pyramid.
One of the most progressive, widespread and long-lasting projects was initiated a few years ago and operated since 2015.
The website of the company states that it’s a trading organization with a unique virtual currency based on cryptographic technology which is not an altcoin.
This means that it is not an alternative and not cloned from the Bitcoin cryptocurrency, created by minor changes, and is an entirely independent network of blocks. Its creators positioned it as the largest reserve cryptocurrency of the world of the future with the possibility of mining up to 120 billion coins. The company notes that its virtual currencies are a new generation of tokens that are easily mined, used and traded due to the structuring of the system.
According to OneCoin official info, its main business is selling educational material for trading. Members can buy educational packages ranging from 100 euros to 118,000 euros, and each package includes “tokens” for “mining” the projects crypto – OneCoins. Officials told that servers performed mining at two sites in Bulgaria and one location in Hong Kong. Most packages give the new educational material, which was plagiarized (no doubt) from several sources. The company and its recruiters made claims that OneCoin doesn’t sell cryptocurrency – but only educational materials. However, in a regular OneCoin meet-up, most of the time recruiters talked about investing in cryptocurrency, and the educational content was barely even mentioned.
The real company operations turned out to be much more sinister and ambitious as well as long-playing.
Truth be told, the well-known nowadays Ponzi scheme of the OneCoin project showed quite high survivability in the world where the regulation hammer strikes more and more often.
The evidence contributing to OneCoin’s status as a pyramid scheme is quite solid – as top executives have previously been involved in other known scam operations, its resources contained no verifiable evidence for any of its business claims.
Funny thing is, the quality of hosted content, including English and website construction, are noticeably poor for an alleged international operation run by the native speakers.
Going on, the OneCoin founder, owner, and Chief Operating Officer ‘Dr. Ruja Ignatova’ personality is a subject of major concerns. Information uploaded to OneCoin.eu stated that she received degrees from the University of Oxford, and is the former CEO of Bulgarian CSIF private investment firm. It has been evident from the first day of launching of this project that the company is selling nothing but air. They claimed to issue a cryptocurrency which doesn’t exist on a blockchain and make people rich in the process.
Moreover, the top OneCoin executives such as Sebastian Greenwood and Nigel Allan have both been noticed in financial shenanigans in the past.
Greenwood previously worked in the no longer existing financial Unaico pyramid, which has provoked criticism and warnings from the Commission on securities and stock exchanges of Pakistan.
Alan, the former President of OneCoin, previously organized similar financial pyramids, namely Crypto888 and Brilliant Carbon.
Like in all of the pyramid scheme-based cases, people had undoubtedly made a lot of money – by recruiting new investors, but not it is evident that the vast majority of contributors will never get their money out now for sure.
The team of OneCoin had made some very bold statements, and most of those backfired. The good thing is, now it is evident that no government or authority will recognize this Ponzi scheme as a legitimate investment opportunity in the future. Misleading people is pure art, that much is evident.
Everything looked pretty well up some point. The problems, however, arose pretty soon.
The notorious Ponzi scheme has gotten into some hot legal waters around the world, with multiple countries actively investigating what this project claims to offer. That situation is only getting worse, with other countries launching official investigations – a lot of experts say that it is just a matter of time until this project collapses, and when that happens, many people will lose their money in the process forever now.
However, the fraud project went under legal fire even earlier:
June 2017. The CEO of OneCoin Ltd. claimed OneCoin being licensed by the Vietnamese government, and purchasing legal rights for usage in Vietnam as a digital currency and being the first cryptocurrency in Asia officially licensed on that level.
June 20, 2017. The Ministry of Planning and Investment of Vietnam issued a critical statement that the document which OneCoin used as proof was forged – what a surprise! The documents are known to be against the MPI regulations and that the person who supposedly signed the document was not in the position claimed by the document at the time when the document was created. MPI warned individuals and enterprises to be vigilant if they encounter the document during business.
July 2017. Ruja Ignatova, the CEO, was charged in India with duping investors as a part of the Indian Investigation.
Two months later, the Italian authorities fined the company for 2.5 million euros. More than five countries warned investors about the risks associated with investing in this company. Among them: Thailand, Croatia, Bulgaria, Finland, and Norway.
On 17 and 18 January, 2018 Bulgarian police raided OneCoin’s office in Sofia, Bulgaria, based at the request of the prosecutor’s office in Bielefeld, Germany. German police and Europol took part in the bust and the investigation. Also, 14 other companies, tied to OneCoin, were investigated and 50 witnesses were questioned. OneCoin’s servers and other material evidence were seized.
Scandals in countries around the world have proven that OneCoin is indeed a major fraudulent project. Investors around the world have lost more than $ 2.5 billion. Currently, there is no way to exchange one coin to any other currency.
Meanwhile, during the next weeks, we are going to reveal more exciting stories about how the world got robbed with the usage of smart thinking and the new technologies. Stay tuned!