Onecoin

Onecoin is a virtual cryptocoin, based on Bitcoin and other cryptocurrencies, promoted by Onecoin Ltd, a Gilbratar company lead by Bulgarian Ruja Ignatova.[1]

The company and the scheme is on observation list of many authorities, among them are authorities in Bulgaria, Finland,[2][3][4] Sweden,[5] Norway[6] and Latvia.[7] Currently, none of the countries have declared Onecoin as criminal activity but authorities have warned of potential risks involved in business like Onecoin. On 30 September 2015 in Bulgaria, FSC (Financial Supervision Commission) also issued a warning of potential risks in new cryptocurrencies, giving Onecoin as an example.[8] After the warning Onecoin ceased all activity in Bulgaria and started to use banks in foreign countries to handle wire transfers from the investors.. In March, 2016, The Direct Selling Association in Norway warned against OneCoin, comparing it to a pyramid scheme [1]

The Onecoin Ltd claims that it is the fastest growing company in the world and claims to overtake Bitcoin within a year. It should be noted that Bitcoin is not a company but a cryptocurrency.

Concept

According to Onecoin, its main business is selling educational material for trading. Members are able to buy educational packages ranging from 100 euros to 25,000 euros.[2] Each package includes "tokens" which can be assigned to "mine" Onecoins. Onecoin is said to be mined by servers at two sites in Bulgaria and one site in Hong Kong. Each level (except six and seven), or package, gives new educational material, which are copied from several sources.[9] The company and its recruiters claims that Onecoin doesn't sell cryptocurrency but only educational material. However, in a typical Onecoin recruiting meeting most of the time recruiters talk about investing in cryptocurrency and the educational material is barely even mentioned.[10]

The claimed cryptocurrency is held closed source at least until 2018, when 80% of Onecoins has been mined. In reality, there is no need for mining as there is no need for blockchain, such as in Bitcoin which is mined and maintained by public distributed network. Onecoin being maintained only by one company leads to no-need for blockchain, as it can be, and must be, controlled by the company itself without third parties. Being closed sourced, Onecoin Ltd has claimed that each of their "blockchain" are audit by a third party. Originally this third party was claimed to be equal to Ernst & Young, turning out to be Bulgarian Semper Fortis, a subsidiary of Morison. Soon after the publicity Semper Fortis changed its name to SF Bulgaria and Onecoin started to refer S-Systems as its auditing partner. S-Systems has some of the old Semper Fortis employers.

The only way to exchange onecoins to any other currency is Onecoin Exchange, an internal market place for members who have invested more than just a starter package. Currently, onecoins can only be exchanged for euros, which are placed in a virtual wallet from which they can be requested for wire transfer. The market place has daily selling limits based on which packages the seller has invested in, which greatly limits the amount of onecoins to be exchanged. On 1 March 2016, without a prior warning, Onecoin issued an internal notice that the market would be closed for two weeks for maintenance. The notice explained that the maintenance was necessary due to high amount of miners and for "better integration with blockchain".[11] Onecoin is closed cryptocurrency and the mining is claimed to be done by the company itself with three servers, hence the claim of high amount of miners is strange. Also, it's yet to be seen what the claimed blockchain integration was supposed to be. On 15 March 2016, after the two week maintenance, the market opened again but no visible changes had been done; most of the transactions expire as before and daily limits stayed on.

References

  1. 1 2 "Vil ikke være politi". Direktesalgsforbundet. Direktesalgsforbundet. Retrieved 25 March 2016.
  2. 1 2 YLE (2016-03-14). "Finns investing millions in new virtual currency; police keeping tabs on case".
  3. ↑ Poliisi (2015-04-11). "KRP ON SELVITTÄNYT ONECOIN-VIRTUAALIRAHAA" (in Finnish).
  4. ↑ Helsingin Sanomat (2015-11-04). "Krp ei aloita tutkintaa Onecoin-valuutasta – kehottaa silti erityiseen varovaisuuteen" (in Finnish).
  5. ↑ Lotteri Inspektionen (2016-01-27). "OneCoins verksamhet polisanmält för misstänkt brott mot lotterilagen" (in Swedish).
  6. ↑ direktesalgsforbundet.no (2016-03-03). "Vil ikke være politi" (in Norwegian).
  7. ↑ "FKTK brīdina par OneCoin sniegtajiem pakalpojumiem" (in Latvian). 2016-03-11.
  8. ↑ FSC (2015-09-30). "СЪОБЩЕНИЕ – OneCoin" (in Bulgarian).
  9. ↑ Petteri Järvinen (2015-05-29). "OneCoin-koulutusmateriaali kopioitu kirjoista" (in Finnish).
  10. ↑ "OneCoin valtaa Aasiaa" (in Finnish). 2016-03-01.
  11. ↑ "OneCoin - Uusi pyramidihuijaus? KRP: Rikosta voidaan arvioida luotettavasti vasta myöhemmin". 2016-03-02. Retrieved 2016-03-24.
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