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OneCoin Scam: A Comprehensive Dive Into One Of The Biggest Crypto Scams

OneCoin is a cryptocurrency scheme founded by Ruja Ignatova and Sebastian Greenwood. It was launched in late 2014. Years later, it turned out to be a fraudulent scheme without a connection to any blockchain. 

In this article, we will examine the biggest crypto scams in the world, looking at how they operate, their impact, and what investors should look out for when investing in a cryptocurrency. 

How OneCoin Operated: The OneCoin Scam

Ruja Ignatova, the founder of OneCoin, was born a German citizen but was born in Bulgaria, where her father was an engineer and her mother was a teacher. After studying European law at Oxford University, she worked as a consultant for McKinsey & Company, an international management consulting firm. Her clients trusted her, and her fluency in Russian, German, English, and Bulgarian helped her gain their support.

When Ignatova started OneCoin in 2014, she claimed it could be mined and used to make payments, and you could even use an e-wallet. However, it turned out that there was no OneCoin blockchain model or payment system. In addition, the company carried out database entry fraud that mimicked transactions that weren’t recorded by a real blockchain, and that didn’t include mining despite the appearance of the coin’s release, which was publicly available for the market to trade. 

The company also sold educational materials on cryptocurrencies, trading and investing. The courses were part of a marketing scheme, where they gave buyers rewards for bringing in more participants. These buyers were also to receive tokens that could be used to mine OneCoin. Unfortunately, many of the materials offered were plagiarized. Prior to its collapse, OneCoin rejected most withdrawal requests. 

Later, in 2016, questions about the cryptocurrency emerged as countries started investigating the company, with some calling it a scam. In March 2016, the OneCoin scam was first referred to as a pyramid scheme by the Direct Selling Association in Norway

Later that year, the Hungarian Central Bank also issued a warning against OneCoin as a pyramid scheme. When OneCoin asserted that it was the first business to obtain a license from the Vietnamese government and be granted permission to operate as a digital currency, the Vietnamese authorities refuted the assertion. 

In 2017, Ruja disappeared. She was replaced by her brother, Konstantin Ignatov, as the face and manager of the company. Later on in 2018, her co-founder Greenwood was arrested and her brother was arrested in 2019. Konstantin pleaded guilty to fraud and money laundering. Investigation showed that OneCoin never actively traded and none of the coins were used to purchase anything.

Signs Investors Should Look Out for When Investing in a Cryptocurrency

Signs investors should look for before investing in crypto

1. The company trades crypto but is not registered as a money service business:

The Corporate Affairs Commission is set up to register all types of businesses, including money service businesses in Nigeria, and they are also regulated by the Securities and Exchange Commission. You can visit the Financial Crimes Enforcement Network to see if that particular cryptocurrency is registered. This sign isn’t all-encompassing, but most scams involve unregistered entities, people, and products. 

2. No physical address: 

If a cryptocurrency or forex trading platform doesn’t give you a company address, it clearly shows that the site’s owners don’t want you to know where they are located. On the other hand, if there is an address, do a Google/Apple map search to see if the address is real and looks like a legitimate place of business. You might also want to avoid companies that don’t have a U.S. headquarters. If the trading platform is offshore, know you may have little or no protections if something were to go wrong. 

3. The website’s age doesn’t match its claims. 

Start by looking up domain registrations in a registration data lookup tool. You can determine the creation date of the web address from the results. You may tell it’s a fraud if the company says it has been operating for a number of years, yet the domain registration was only made a few weeks ago. It is highly unlikely that other trading platforms with millions of users or billion-dollar transaction volume would make such promises if they were just a few weeks or months old. 

Additionally, you should avoid websites that don’t finish with dot-com or sound similar to other well-known businesses. 

4. Winner of awards you’ve probably never heard of: 

Scam websites frequently display badges and prizes that proclaim “Best Site,” “Customer Satisfaction,” or something cliched in an attempt to establish credibility. Don’t trust them if you’ve never heard of the awards and it’s not clear who presented them.

5. Lack of Financial Management: 

To evaluate the company’s approach to financial management, you have to examine its finances in detail. Some things you should note include excessive cash outflows without a clear route to profitability and a lack of financial discipline. You also have to examine the startup’s revenue estimates closely to make sure they are both realistic and reasonable.

Frequently Asked Questions (FAQs) About The OneCoin Scam

Is the OneCoin founder in prison?

Karl Sebastian Greenwood, the co-founder of OneCoin, was sentenced to 20 years in prison for orchestrating the massive OneCoin fraud scheme. However, Ruta Ignatova, his co-founder, is still a fugitive after disappearing seven years ago. Ever since then, she’s been on the run and is on the FBI’s 10 Most Wanted list.

Is OneCoin still operating?

No, OneCoin is no longer operating. The cryptocurrency was shut down in January 2017.

What Are the Biggest Crypto Ponzi Schemes?

Apart from the OneCoin Ponzi Scheme, some of the biggest crypto Ponzi schemes include Bitconnect, PlusToken, GainBitcoin, and Mining Max. 

How much is OneCoin right now?

OneCoin cryptocurrency is no longer active because the company has been shut down. This makes its price $0.00, and its trading volume is $0. Also, its current market capitalization is $0 and it ranks #16033 on the market.

Can I sell my OneCoin? 

You can’t. OneCoin was a digital currency scheme widely recognized as a fraudulent Ponzi scheme. 

Conclusion

This article on OneCoin crypto scams shows fraudsters feasting on people’s lack of crypto and blockchain education. That’s why it is advisable to carry out due diligence whenever you are faced with a crypto investment opportunity, no matter how reputable you may think the company pitching is. Be sure to exercise due caution, as it is the best way to spot red flags and ensure you don’t fall prey to cryptocurrency investment scams. 

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