The Financial Conduct Authority, citing an investigation by the City of London Police, has issued an official warning, urging users to be wary of trading with the altcoin, OneCoin.
In an official warning published yesterday, the Financial Conduct Authority in London has sought to inform users against the trading of OneCoin. The altcoin, which is notably based on a centralized system unlike other cryptocurrencies like Bitcoin, Ether or Monero, has frequently seen accusations of being a pyramid-scheme in the past.
The FCA warning read:
We believe consumers should be wary of dealing with OneCoin, which claims to offer the chance to make money through the trading and ‘mining’ of virtual currencies.
The authority points to an ongoing investigation by the City of London Police, details of which are currently unknown. As OneCoin isn’t authorized in any official capacity, the FCA reminds users that consumer protection will not be able to avail consumer protection.
The latest warning comes after a series of similar statements from other European countries. The most notable warning from an official authority – aside from yesterday’s FCA warning – was that of the Belgian Financial Services and Market Authority (FSMA), in July 2016.
While indicting all virtual currencies “such as Bitcoin” are associated with “risks”, the FSMA had a particularly pointed warning for users engaging OneCoin. More specifically, the authority sought to admonish claims from OneCoin promoters that the alleged cryptocurrency received recognition from the FSMA.
More recently, the Swedish Bitcoin Foundation also released a warning, while taking note of OneCoin’s tremendous growth with billions poured in by investors. The Foundation’s chairman, Mars Henricson, wrote:
But Onecoin is not like the crypto currencies compared with, such as Bitcoin. Without an inspectable block chain, open break and independent venues so it is impossible to independently ensure that Onecoin not a scam or a pyramid scheme.
“We therefore conclude that there is a great risk [and] that Onecoin is a fraud,” Henricson added, urging for caution.
As a reminder, OneCoin isn’t based on a public ledger and its discreet code and core infrastructure brings into disrepute its very claim of being a cryptocurrency. Investigative researchers have gone a step further, with one calling OneCoin as a”pyramid scheme disguised as a new digital currency,” prior to the ‘cryptocurrency’s’ recent foray into the United States.
Meanwhile, Kaj Naparstok one of the earliest and most notable investors of OneCoin, has seemingly admitted to the accusation of OneCoin being a network marketing – commonly known as multi-level marketing or MLM – company during a social media post explaining that OneCoin is now merely a “financial company” that is in the process of building the “world’s biggest payment solution.”
Writing on his Facebook page from a beach in Thailand, Naparstok stated:
Still today many people don’t really understand our concept…
Onecoin is just a financial company building up world’s biggest payment solution. Onecoin has nothing to do with network marketing anymore. Through its digital payment solution based on cryptocurrency OneCoin will empower billions of people by providing them easy, secure and fast access to banking.
A comprehensive analysis by MLM research resource BehindMLM – from September 2014 – had concluded:
[OneCoin] is a simple recruitment-driven pyramid scheme, backed with a residual binary compensation structure.
Masquerading as a crypto-currency, OneCoin’s OneTokens are nothing more than Ponzi points…The more people join the OneCoin concept, the higher the popularity and value of the currency.
The more popular OneCoin is, the higher the value of the cryptocurrency.
Featured image from iStock/jakkapan21.