Unfortunately, with the amount of money being invested into ICOs, there's a lot of scams in the cryptocurrency world.
One cryptocurrency that raises plenty of red flags is OneCoin.
And whilst it’s been operating for a few years now, investors are still being sucked into this Multi Level Marketing (MLM) scheme.
So in this OneCoin review, we’ll look at what is OneCoin, why it's a scam and some of the ongoing legal investigations into this cryptocurrency.
Note: This OneCoin review is based on research, ongoing investigations and media all over the web.
But if you’re a OneCoin fan, or you have any opinions you’d like to share, let me know in the comments section below.
1. What Is OneCoin?
1.1. OneCoin Blockchain
I'll be honest here, there's no real technical details revealed about OneCoin's blockchain.
That's a red flag in itself.
But from what I can understand:
- You can create DApps on the OneCoin blockchain using their OneLife Mobile App Builder
- Know-Your-Customer (KYC) documents are stored on their blockchain
- They're planning to provide a scalable blockchain for accepting mass levels of payments
- It's designed for B2B merchants who want to accept digital payments from their customers
Note: OneCoin's project looks like it's doomed to failure.
I can't see them delivering on any of the above promises.
Now let me be honest with you:
In most of my coin reviews, I'd look at the technology, protocols and use cases of the cryptocurrency - as described in their white paper.
With OneCoin, it's difficult to find a legitimate source.
Let me explain by highlighting the biggest issue: they have no official whitepaper.
1.2. Their Whitepaper
Usually if you want to research the mechanics of a blockchain, the first place you'd look is the project's whitepaper.
Now one of the biggest concerns I have is that they don't even host a whitepaper on their website.
That worries me.
Take a quick Google search and the top result is a file hosted on Scribd - it's not even listed on their official website.
So I took the search one step further, and looked for any mentions of a whitepaper on their website.
But still, nothing of value came up.
So I literally couldn't find an official source for their whitepaper report.
1.3. OneCoin Vs Bitcoin
Whilst OneCoin claims to be like Bitcoin, it's a completely different business model.
Bitcoin is one of the largest cryptocurrencies in the world.
It has a huge community, and it's traded against every other cryptocurrency on the market.
OneCoin on the other hand, is more like a network marketing model.
It's kind of like the HerbaLife of the cryptocurrency world.
As far as their blockchain is concerned, OneCoin hasn't really released any technical details about their technology.
It's not open source and they don't have a development community.
2. Is OneCoin Legit?
2.1. Is OneCoin Real?
One of the biggest problems with OneCoin is that it can't be traded on any exchanges.
That means if you own the token, you can't sell it into fiat (traditional currency).
And this problem has been reported all over the web.
So how do you know that it really exists?
And what's it actual market value?
Again, that's another question I've seen raised a lot online. But it still hasn't been answered yet.
So let's look at the facts:
- There's no official whitepaper
- OneCoin hasn't released any technical details about their blockchain
- They don't have an open source development community
- Their pre-paid card option was officially denounced by MasterCard (I'll cover this later)
- Their original CEO has disappeared
- Most of their leadership team has left the company
- They've been prosecuted and faced legal action from almost every major country they were operating within
With all of that in mind, I'd be very surprised if their tokens have any value at all.
Along with BitConnect, OneCoin is one of the biggest cryptocurrency scams I've seen in the industry so far.
2.2. OneCoin Fraud
I'll come onto the legal problems with OneCoin over the next few sections.
But you have to understand that any type of Ponzi Scheme is a form of fraud.
That's because the income OneCoin's investors are promised, doesn't actually exist.
It's just fuelled by new recruits.
So when the flow of new recruits eventually ends, so does the income for it's investors.
So here's a few cases of OneCoin fraud:
3. Why Is OneCoin Considered A Scam?
3.1. OneCoin MLM & Network Marketing
So let's get into the meat of it.
Basically, OneCoin operates via an MLM model.
So to get into OneCoin, you have to invest your own money.
Then once you've invested, you're pressured into recruiting new members.
If you don't recruit new members, you won't get your investment back.
So as we'll cover below, this comes with a lot of risks.
3.2. OneCoin Compensation Plan
Here's how OneCoin's compensation plan works:
Basically, if you refer someone to buy their coins, you'll get a 10% commission.
If someone you've signed up refers another new member, you'll get a 10% bonus on that too.
So this creates a pyramid scheme:
Why are pyramid schemes a scam?
3.3. OneCoin Ponzi Scheme
So not only is OneCoin a pyramid scheme, it's also a Ponzi too.
That's a double whammy.
Basically the money from new investors is used to fund money owed to existing investors of OneCoin.
When the flood of new investors ends, so does the income guaranteed by OneCoin.
So at any moment, the whole pyramid could collapse.
But it gets worse.
Investors tend to get a little greedy.
So when investors see the commissions they've received from OneCoin's new recruits, they become temped to invest more and more.
Until eventually, the pyramid collapses - along with their hard earned money.
A classic example of a Ponzi Scheme gone wrong is the Madoff investment scandal.
Definition: A Ponzi scheme is a form of fraud.
Ponzi schemes pay old investors returns using money from new investors.
One of the things that blows me away about OneCoin, is the amount of warnings around the web.
I haven't seen a cryptocurrency take this much of a beating before.
Even BitConnect would struggle to rival OneCoin's infamous reputation.
4. OneCoin Worldwide
4.1. Is OneCoin Legal?
Whilst OneCoin did have a global network, it's been shutdown in a lot of countries.
There's been tons of legal problems with OneCoin.
In fact, their servers have been shutdown and banned around the world.
With billions of dollars involved, this is a heavy legal case.
And from Bulgaria to China, OneCoin has attracted a lot of negative press.
So let's look at few examples.
4.2. OneCoin Prosecuted In China
In May 2018, OneCoin was prosecuted as a pyramid scheme in China.
98 people were taken to court, with an estimated 2 million victims involved.
Over 20,000 bank accounts were analysed during the prosecution.
Whilst $2 billion was originally invested, only $266 million of this has been recovered.
This case has been reported as the biggest ever prosecution of an MLM network in the Hunan province.
4.3. OneCoin Raided In Bulgaria
In January 2018, OneCoin's Bulgarian servers were raided and shut down by local police.
4.4. Other Investigations
OneCoin is reportedly being investigated across countries all over the world now including:
- United States
5. Why Is OneCoin Not A Good Investment?
Useful: Looking for alternative cryptocurrency investment options?
Then check out my guide to the best cryptocurrencies to invest in 2018.
6. Why Do Some People Feel OneCoin Is A Good Investment?
I have no idea.
Whilst OneCoin seems like a project you definitely shouldn't invest in, surprisingly some people are still being drawn in.
So why is that?
7. The Team
7.1. OneCoin Founder
OneCoin was founded by their Chief Operating Officer Dr. Ruja Ignatova in 2014.
Dr. Ruja Ignatova originated from Bulgaria after working in Asset Management.
7.2. CEO's Public Disappearance
It's actually reported that Dr. Ruja has disappeared from the public since October 2017.
There's been no public appearances or press releases directly from Dr Ruja since then.
She actually stepped away from the company and her brother Konstantin Ignatov is now the CEO.
Also, most of the company's corporate leaders have left the business too.
So the project's team is gradually losing control.
7.3. OneCoin Mastercard
But again, it just seems like fake news.
- There's no registration form to order the card
- The announcement was made on their website way back in March 2016
- There's not been any updates on the card's availability since then
- MasterCard even went as far as officially denouncing the OneCoin card as a scam
- Whilst cards were released for a very short period, they were quickly suspended and don't work anymore
8. OneCoin's Value
8.1. Why Is Cryptocurrency Worth Anything?
To understand OneCoin's potential value, you need to comprehend why cryptocurrency is worth anything in the first place.
You see currency is only worth as much as someone's willing to pay for it.
The market dictates this.
When it comes to cryptocurrency, the price is usually based on their future potential.
With OneCoin, there's no real substance to it.
I couldn't even find any technical details about their blockchain after researching online.
It seems to me like OneCoin is more about creating a pyramid scheme, where the further you are up the chain, the more money you might make.
So it's not really solving a problem.
Plus, network marketing schemes tend to have very low quality products.
Just look at HerbaLife or BitConnect - their products are virtually useless, but their concepts made a lot of money for those who got in first.
That's definitely not the sort of investment you want in your portfolio.
Because essentially, their coin has no long term worth.
8.2. OneCoin's Price
You can see OneCoin's price history in the chart below.
But as we've discussed, this coin really isn't worth anything.
After all the scam's, legal court cases and their CEO/founder completely disappearing, this cryptocurrency is basically a write off.
Also, because the coin isn't traded openly on the market - their price isn't really valid.
After all, any type of currency is only worth as much as someone's willing to exchange it for.
So if you can't trade OneCoin, it has no value.
8.3. Market Cap
Even OneCoin's listing on CoinMarketCap isn't legit.
It's named 1Coin instead of OneCoin and CoinMarketCap's link to their website goes to an old URL that doesn't even work.
That's actually something I've not seen on CoinMarketCap before.
In terms of OneCoin's revenue, I've seen estimates range from $2 Billion to $8 Billion.
9. The Future Of OneCoin
After being investigated in their hometown in Bulgaria, and being prosecuted in China for $266 million, the future of OneCoin looks very bleak.
I think eventually they'll be completely wiped out, if it hasn't happened already.
9.1. Did OneCoin Investors Get Their Money Back?
Only a tiny fraction of the total $2 Billion invested in OneCoin has been recovered.
So most people have lost their whole investment.
It's sad to see stories of people's family and friends losing money.
And whilst it's easy to see that OneCoin is a scam now, I think there's a lot of naive investors who were sucked into the whole MLM model.
Whilst the decentralization of cryptocurrency technology is definitely a benefit, it also leaves the industry wide open for cowboys too.
9.2. More Regulations
80% of ICOs are reported to be scams.
And I think in the future, we'll see a harsher crackdown on schemes like OneCoin.
Stricter controls are already being put into play around the world in the cryptocurrency industry.
- The Financial Conduct Authority (FCA), stating that cryptocurrency derivatives need to be declared by businesses
- India banning cryptocurrency trading exchanges
- China banning ICOs - although some cryptocurrency ICOs are still being launched on NEOs platform
Over the next few years, I can only see controls becoming increasingly stricter.
Obviously, that could have a negative on the cryptocurrency market as a whole.
9.3. Cryptocurrency Scams
So why are cryptocurrency scams popping up?
And why do people continue to fall for them?
I mean, just look at BitConnect's rise to fame.
It's MLM scheme ended in tears.
Personally, I think this is the problem with new technology like cryptocurrency.
Because it's so speculative, most amateur investors don't understand how to differentiate between a strong cryptocurrency and a scam.
And when people get excited by it's potential, a lot of hype is created.
Now here's the other problem:
People are investing in cryptocurrency without doing their research.
And just the like the dotcom bubble, scams will follow the money.
In a way, I'm happy the market has crashed so hard in 2018 because it's allowed the scammers to be exposed.
Plus it's scared away those investors who wanted a 'get rich quick scheme'.
9.4. How To Avoid MLM Cryptocurrency Scams
First of all, any type of investment carries risk.
And investing in the cryptocurrency market is particularly risky.
So if you're not willing to lose your initial investment, I wouldn't recommend trading crypto.
Sadly, I don't think scams in the cryptocurrency world will stamped out completely.
But how can you spot an MLM scheme?
And what are some good ways to research a cryptocurrency before you invest?
Well, here's a few useful tips to help you avoid getting burned by an MLM scheme:
- Check The Whitepaper: Read the cryptocurrency's whitepaper and look at how their business model works. If there's no whitepaper, that's a big red flag.
- Online Reputation: Look at how people are talking about the cryptocurrency. If you consistently see negative comments and bad reviews, it's a not good sign.
- Speak To Investors: Whether it's online or offline, speak to previous investors and see what they have to say about the cryptocurrency. But watch out for sales pitches too.
- Adoption: If major exchanges haven't listed the coin yet, take that as a sign that it's not considered a well established cryptocurrency.
- Stay Skeptical: If you're being offered 'guaranteed income' or any other type of unrealistic deal, walk away. It's better to stay safe and invest cautiously.
10. Where Can You Find The Latest OneCoin News?
11. OneCoin Exchanges
Can You Actually Sell OneCoin?
OneCoin is essentially un-tradeable.
I've not seen any cryptocurrency exchanges where you can buy and sell OneCoin.
So it can't really be bought or sold on the market.
It's only available directly from their website.
And once you hold OneCoin, you're kind of stuck with it.
Plus if a cryptocurrency can't be traded back into a real world currency, it's basically worthless.