European Authorities Tackle Suspected Cryptocurrency Scam
After releasing several warnings of alleged fraudulence, the Hungarian central bank, Magyar Nemzeti Bank (MNB), has announced the formulation of a task force to investigate the infamous OneCoin venture.
The announcement was made following a May 5, 2017, meeting between the Hungarian bodies that make up the task force: the Interior Ministry, Budapest Police Headquarters, the Municipal Prosecutor’s Office, the National Bureau of Investigation, the National Tax and Customs Administration, the National Police, the Prosecutor General’s Office, and the MNB’s Market Surveillance working group.
Over the last few years, the central bank has repeatedly warned consumers of the potential risks associated with the project. Founded by Dr. Ruja Ignatova, OneCoin has been classified as an unverified cryptocurrency and is suspected of being a Ponzi scheme due to it not having verifiable evidence to back any of its illustrious business claims. The marketing copy boasts:
“OneCoin empowers millions of people by providing borderless, low-cost financial transactions and connecting them to the financial world. OneCoin has developed a loyal, global customer base of millions of people in over 195 countries and six continents and is independent of governments.”
The company focuses largely on core capital markets in Africa, Europe, India, and Southeast Asia and gained a reputation as a “get rich quick” scheme after thousands of investors flocked to promises of prestige and handsome commissions by simply recruiting peers also looking for that “once in a lifetime opportunity.”
Under the OneCoin business model, members are charmed into purchasing “educational packages” ranging between 100 to 118,000 euros. Every package includes informational material and tokens which are used to mine OneCoin. Although the company claims it does not sell cryptocurrency, members could exchange these OneCoins at xcoinx, the OneCoin marketplace for those who thoroughly invested in the venture.
Nevertheless, OneCoin shutdown xcoinx in January 2017 without warning. The following month, all remaining German OneCoin bank accounts were frozen by BaFin – Germany’s federal financial supervisory authority. On April 27, 2017, BaFin issued a cease and desist order against Bielefeld-based IMS Deutschland GmbH, payment processor for all German OneCoin investors. SMNWeekly reports that “state criminal police prosecutors from the North Rhine-Westphalia and local investigators of the city of Bielefeld, have opened an investigation.”
BaFin’s website states:
“The German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin) issued cease and desist orders against Onecoin Ltd, Dubai, and OneLife Network Ltd, Belize, holding the companies to dismantle their internet based “OneCoins” trading system and to end all sales promotion activities in Germany immediately.”
In addition to MNB and BaFin, the UK’s Financial Conduct Authority and Belgium’s Financial Services and Markets Authority, have dispersed warnings that took aim at OneCoin in the recent past.