Definition
OneCoin is a digital currency, based on cryptography, whose creation was announced in 2014 by OneCoin Ltd, a company founded by Ruja Ignatova. However, it’s infamously known as a global Ponzi scheme, under the guise of an investment-based cryptocurrency. Numerous governments have declared it a fraudulent scheme, resulting in various arrests and legal cases.
Key Takeaways
- OneCoin is a type of “cryptocurrency” that was founded by Ruja Ignatova in Bulgaria. However, it has been widely criticized and is considered by some to be a scam.
- Unlike other cryptocurrencies which operate on decentralized platforms, OneCoin operates on a private blockchain network. This has raised concerns about transparency and reliability.
- It is important to research thoroughly and make informed decisions when investing in cryptocurrencies like OneCoin. Many governments and cryptocurrency experts have warned against OneCoin due to allegations of fraud and criminal activity associated with it.
Importance
OneCoin is significant in finance primarily as a notorious example of a cryptocurrency fraud scheme. It caught international attention due to its controversial nature.
OneCoin was marketed as an investment opportunity and claimed to be a new and improved cryptocurrency that would outperform Bitcoin. Investors were promised high returns and bonuses for recruiting others into the scheme.
However, it was revealed as a Ponzi scheme in 2016, where money from new investors was used to pay older investors, rather than genuine profits from a trading operation or valid cryptocurrency. OneCoin’s founders were accused of defrauding investors of billions worldwide, making it one of the biggest such fraudulent schemes in history.
Hence, OneCoin is a reminder of the risks associated with investing in unregulated areas such as cryptocurrencies.
Explanation
OneCoin is a digital currency, based on cryptography and created through a process called ‘mining’. Just like the serial number on a paper bill, each digital coin is unique. Its primary purpose is to function as a global cryptocurrency that can be used for transactions in an online network. Users mine the coins, earn additional coins through network growth and use them for various transactions, thereby creating a new type of money ecosystem.
Furthermore, OneCoin helps users to make payments easier and faster by eliminating intermediaries, and its blockchain sets new industry standards by storing Know-Your-Customer (KYC) information. OneCoin is also used for investment, offering users potential for growth and profit. It was introduced as a part of a multi-level marketing program where participants were incentivized to recruit additional members, with revenue for the company being generated primarily from package sales rather than coin usage.
However, it is important to note that OneCoin has been largely criticized and is considered by many countries as not being an actual cryptocurrency but rather a scam. It has been subject to investigations and legal actions in various jurisdictions around the world for suspected fraudulent activities. Despite this, the idea behind OneCoin – digital currencies intended to facilitate online transactions for broader user populations – has helped to fuel the ongoing interest in and development of cryptocurrencies.
Examples of OneCoin
OneCoin is a name associated with a widely-known cryptocurrency scam. Here are three real-world examples related to OneCoin:
OneCoin Ltd: This was the main company behind the OneCoin scheme. Established by Ruja Ignatova in Bulgaria, it pitched OneCoin as an investment opportunity promising high returns. However, it turned out to be a fraudulent pyramid scheme where the profit of early investors was paid out from the investments of newer investors.
Arrest of Konstantin Ignatov: In March 2019, Konstantin Ignatov, brother of OneCoin’s founder Ruja Ignatova and a top leader of the OneCoin organization, was arrested at Los Angeles International Airport. He was charged with conspiracy to commit wire fraud in connection with his role as the head of OneCoin, which prosecutors allege was an elaborate pyramid scheme.
OneCoin Scam in China: Chinese authorities in 2017 managed to penetrate the scam, arrests were made, and a substantial amount of money, nearly $2 billion, was recovered. It was a notable episode, revealing the scope of the fraudulent operation and leading to broader awareness of the OneCoin scam.
FAQ Section: OneCoin
What is OneCoin?
OneCoin is a digital currency, based on cryptography and created through a process called ‘mining’. Just like the serial number on a paper bill, each digital coin is unique. Unlike money issued by governments, there is a finite number of OneCoins, ensuring they cannot be affected by inflation and are impossible to counterfeit.
Who created OneCoin?
OneCoin is launched by Dr. Ruja Ignatova in 2014. However, it is widely considered to be a scam due to a lack of a central, transparent and regulated entity managing this cryptocurrency.
Where can I use OneCoin?
As of now, OneCoin’s usability is questionable. Its credibility has been under scrutiny, and several countries have issued warnings about being involved with OneCoin. It is recommended you carefully verify all information regarding OneCoin and consider getting advice from a finance professional before engaging in any transactions involving it.
How can I buy OneCoin?
OneCoin is often sold via exchanging service or a “mining” package. However, due to several allegations and ongoing investigations on the viability and legality of OneCoin, it is advisable to proceed with sufficient caution.
Is OneCoin a good investment?
Experts generally advise extreme caution when dealing with OneCoin. There are numerous reports and investigations claiming that OneCoin is a pyramid scheme. It’s always recommended to conduct thorough research and consider seeking advice from a finance professional before making any investment.
Related Entrepreneurship Terms
- Cryptocurrency
- Ponzi Scheme
- Blockchain
- Digital Currency
- Financial Scam
Sources for More Information
- BBC: Being a reputable news source, BBC has covered OneCoin in some of their articles, providing impartial and accurate information.
- Financial Times: Financial Times has a deep coverage of financial matters worldwide, their in-depth analysis pieces on OneCoin are a must-read.
- Investopedia: It’s a comprehensive digital resource for financial education and definitions. You can find contextual and critical information about OneCoin here.
- Bloomberg: Bloomberg is one of the leading sources for business and market news. Their articles on OneCoin provide detailed insights from a business perspective.
