OneCoin based multi-level marketing scheme has turned out to be a pyramid scheme. Two men were charged in Singapore for promoting a Ponzi scheme based on the OneCoin cryptocurrency. The multi-billion dollar Ponzi scheme has become one of its kind in Singapore.
As per the local police, the marketing policy of OneCoin has breached the Multi-Level Marketing and Pyramid Selling (Prohibition) Act. If the preparators of the scheme are found guilty, each of them can face a maximum jail term of 5 years as well as S$200,000 ($147,000) in fine.
The Monetary Authority of Singapore (MAS) has listed both OneCoin and One Concept Pte Ltd, along with a host of other related organizations, on its investor alert list.
How the Ponzi Scheme Was Run?
The OneCoin scam lured the customers with various promotional offers and discounts on its native tokens for buying online educational courses. Like any other pyramid scheme, the customers were offered incentives for inviting others for the same.
Another similar incident in the United States which was investigated by the FBI suggests that the OneCoin was quite peculiarly different from other cryptocurrencies. While cryptocurrencies promise transparency and maintain records of their investors’ transaction history, OneCoin had no real value. It offered investors no method of tracing their money, and it could not be used to purchase anything.
OneCoin Ponzi Scheme Operators in Deep Trouble
Konstantin Ignatov and Ruja Ignatova, the two key principal operators of the scheme were apprehended at the Los Angeles International Airport for their role in running the Ponzi scheme. Ignatova was charged with securities fraud, wire fraud, and money laundering. Ignatov was arrested on grounds of conspiracy to commit wire fraud.
As in case of any other pyramid scheme, the investors were promised attractive and lucrative incentives for bringing other investors to the table. Despite so many red flags in the programme and possible hints of being a sham, the scam was able to rip off people worth $43 billion. It turned out all the technical aspects and consensus that the programme listed, it makes use of none of them.
The scam is quite similar to the BitConnect, which also looted people and investors with billions of dollars after modeling their scam on blockchain technology.