Unless you’ve been living under a rock, chances are good you’ve heard about Bitcoin in the news.  The cryptocurrency and worldwide payment system are skyrocketing, and its success has paved the way for other companies, like OneCoin to open the door to similar opportunities.

Unfortunately, for every legitimate investment opportunity that comes along, there are twice as many scams.  In this article, we will give you the details on OneCoin so that you can determine if it’s a worthwhile opportunity.  We’ll include facts about the company background, how you earn money, and recent news headlines to help you make your decision.

What is OneCoin and How Do You Earn Money?

Although the name evokes thoughts of Bitcoin, it’s important to be very clear up front that OneCoin is not a cryptocurrency.  Rather, it’s a multi-level marketing company where you recruit new members and make money when they join.  There isn’t any retail product to sell. Instead, you’re selling the ability to use OneTokens to mine coins, make transfers, payments, and access your e-wallet.

To sign up for your membership, you’ll pay the initial OneCoin price of 30 Euro.  If you want to be an investor who earns overrides from your referrals, you’re required to participate at a higher level.  Packages range from $100 to 5000 Euro, and the more substantial investment you make, the higher commissions you’ll make.

You’ll earn a combination of straight commission from new referrals who join the program and OneTokens.  While OneCoin markets their OneTokens as a new cryptocurrency, they don’t qualify under the current definition.  Unlike cryptocurrency, whose value is based on blockchain technology, the value of the OneTokens is completely dependent upon the flow of new money into OneCoin.

As such, OneCoin is both unstable and a prime example of a Pyramid or Ponzi scheme.

OneCoin Background

Registered as a company in June of 2014, OneCoin doesn’t list any information about owners on their WHOIS record.  Two main investors in the corporation, Nazrul Islam Mamun and Zahirul Islam Zahir, have some troubling past charges.

They were arrested in June of 2016 Dhaka, Bangladesh for promotion Ponzi Schemes and OneCoin was amongst one of the corporations named in their charges.  The men were accused of receiving large sums of money during a presentation with false information about the business.  They got this income from the public through the promotion of their company’s OneCoin, Ilgamos, and Impaxgold.

Around the same time, Sweden also announced that they were investigating OneCoin for having ties to a pyramid scheme.

In 2017, OneCoin got into trouble in Vietnam for forging a license to do business in the country.  The Ministry of Planning says that his signature and the seal on the document were faked.  The company is also under investigation in Norway, and Belize has filed a cease and desist against them as they are not licensed to operate in the country.  These are just a handful of the dozens of investigations and complaints against the organization.

Despite all the bad press, OneCoin has over 3.2 million members to date and is planning for either an IPO or ICO in October of 2018.

OneCoin in the News

To date, dozens of authorities around the world are warning people about the OneCoin scam.  In May of 2017 ,Portugal’s Central Bank joined the list that includes other prominent names like the Belgian Financial Services and Markets Authority, and the UK’s Financial Conduct Authority.

The Belgian Financial Services and Markets authority was one of the first organizations to crack down on One Coin in mid-2016, and the UK’s warning came following an investigation by the City of London police into the scheme.

At the time of publication, the OneCoin website was not operational, and there were no statements available to contradict the charges.

OneCoin Stock

While at one time OneCoin projected an IPO in the second quarter of 2018, those plans have since changed.

Although there isn’t any official confirmation from OneCoin on their site, websites that expose multi-level marketing scams have gathered that rather than an IPO offering early in the year, the company will have an ICO in October of 2018.  Although you won’t be able to purchase OneCoin stock, you could participate in the ICO if it comes to fruition.

What’s a Ponzi Scheme?

As OneCoin is widely recognized as a type of Ponzi scheme, here are a few things you need to know about how it works, and why it’s illegal in some countries.

The term Ponzi Scheme was coined back in the 1920’s when a man named Charles Ponzi tricked thousands of New England residents into investing in postage stamps.  He promised people that they would earn a 50% return on their money in 90 days, and used funds he collected from new investors to pay off earlier investors to keep the scheme alive.   Eventually, he ran out of new investors, and he wasn’t able to pay his debts, and the system collapsed.

Also known as pyramid marketing, a Ponzi scheme is a type of investment fraud where the money generated from new investors is used to pay off returns.  Often, organizers of the plan will solicit new members with promises of high returns and little or no risk.

Early-stage investors may sometimes receive the payments they are promised to create legitimacy and credibility in the business, but when the flow of new money dwindles, the scheme falls apart.  This leaves everyone out their initial capital and without any recourse to get their money back.

As OneCoin is widely recognized as a type of Ponzi scheme, here are a few things you need to know about how it works, and why it’s illegal in some countries.

Ponzi Scheme Red Flags

Mr. Ponzi and OneCoin aren’t the first or last companies to try to get people to fall for this “get rich quick” tactic.  To protect yourself and your investments, keep an eye out for these warning signs that will clue you in to a possible Ponzi scheme.

  • Guaranteed high investment returns with no risk. If a company is promising huge returns or is offering risk-free investments, do additional research to see if they’re legitimate.
  • Completely consistent returns. Businesses success will fluctuate over time, and their investment value will vary as well.  If the company reports consistent positive returns even in poor market conditions, question how that’s possible and be cautious of their business model.
  • The investment is unregistered. If the investment isn’t registered with the SEC or state regulators, chances are the company is cutting corners for a reason.  Be cautious in these circumstances.
  • Sellers don’t carry a license. Investment professionals are required by state and federal laws to obtain a license or registration for their area of expertise.  If the firm you’re working with is unlicensed or unregistered, chances are good they are operating a Ponzi scheme.
  • They won’t share their secret sauce. If you’re unable to get answers to questions about how the company does business, invests the money, and makes the returns, it’s possible that they aren’t legitimate.  While not every investor will give you every detail, they should not have secretive or overly complex business strategies that they are unwilling to share.
  • You’re not paid correctly or on time. If you have difficulty getting your payments or cashing out your investment, this is a big red flag that the company you’re working with might not be legitimate.  Ponzi scheme promoters will often encourage you to roll over your investments to keep your cash in the game and to avoid having to pay out money they don’t possess to make good on the returns you were promised.

If you’re concerned that you have encountered a company running a Ponzi scheme and you live in the US, call the SEC at (800) 732-0330 to report them and file a claim.

What About Bitcoin?

The big picture for OneCoin is pretty bleak, and overall, it’s a risky investment.  Pyramid or Ponzi schemes are illegal in the U.S. and are rarely successful unless you’re the person at the very top.

That said, don’t mistake the OneCoin model for Bitcoin.  The two are completely separate entities, and the failure of one should not impact your thoughts and feelings about the other.

Bitcoin is a decentralized cryptocurrency payment system that’s been around since 2009.  There have been updates and improvements made since then, and it continues to grow in value.

While no investment is ever guaranteed, there’s a possibility you could make a significant return on your investment as the currency continues to grow in popularity.

How Do I invest in Bitcoin?

Whether you’re an average Joe or a seasoned investor, it’s pretty simple to get started.  You can buy Bitcoin, also known as BTC, through a variety of established firms worldwide.  In the U.S, use a service like Coinbase that sells Bitcoin to you at a markup of only around 1% of the current market price.   You can link the app directly to your bank account and even set up automatic purchases if you want to continue investing at regular intervals like when you receive your paycheck every month.

The Bottom Line

There are lots of ways to capitalize on the popularity of cryptocurrency as an investment right now, and OneCoin claims to be one of them.  Although the company has a significant number of members worldwide, they are widely recognized as a scam in many European countries.  Several authorities warn against working with them as their business model is an illegal pyramid scheme, and you could lose a significant amount of money.  Regardless of what you decide, be sure to do your research before taking on any new investment opportunities.

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