OneCoin abandon US operations
It hasn’t been a good for week for OneCoin.
It started off with complaints from affiliates who hadn’t been paid for a month. Then came the abrupt announcement that OneCoin was changing its bank.
It was later revealed that the change of banks occurred after the Bulgarian Financial Supervision Commission issued a warning against OneCoin investment.
Almost $200,000 was stolen from an affiliate who dared to question why they weren’t getting paid, and new mandatory recruitment criteria was introduced to stop affiliates who didn’t promote OneCoin from withdrawing funds.
Now the situation continues to deteriorate, with news that OneCoin have formally abandoned their US operations.
The announcement was made on OneCoin’s Facebook page, issued roughly an hour ago:
Until all matters are clarified, we need to temporarily suspend new registrations from the USA.
OneCoin trading will be also restricted for this time period. We also kindly ask all our affiliates to not market the concept during events and through other media.
The move comes after just a few months ago, OneCoin announced they were officially launching in the US.
Reasons cited for the termination of US operations are sketchy at best, with OneCoin citing an unrelated decision by the US Commodity Futures Trading Commission last month:
On September 17th, 2015 the CFTC defined Bitcoin and all other legitimate cryptocurrencies as commodities, and put them all under the same regulations.
This is a great step towards making cryptocurrency more legitimate and tangible as well as more tradeable.
OneCoin examines the new developments with our legal team – if and what licenses will be needed for the company to operate and respect all rules and new regulations. We also strive to register with the SEC in the next time.
For starters, OneCoin is not a cryptocurrency. It cannot be traded for anything outside of OneCoin itself (including the various inhouse ventures OneCoin operate), nor can members of the general public acquire the coin.
Secondly, the decision cited has nothing to do with OneCoin’s soliciting investment in the US.
CFTC Orders Bitcoin Options Trading Platform Operator and its CEO to Cease Illegally Offering Bitcoin Options and to Cease Operating a Facility for Trading or Processing of Swaps without Registering
In First Action against an Unregistered Bitcoin Options Trading Platform, CFTC Holds that Bitcoin and Other Virtual Currencies Are a Commodity Covered by the Commodity Exchange Act.
OneCoin do no offer BitCoin options, nor do hey operate a swaps platform.
So what’s the real reason OneCoin are abandoning the US?
Well, the mention of the SEC is a pretty solid giveaway.
OneCoin offer unregistered securities globally, with newly invested funds used to pay off existing investors.
In addition to problems with local Bulgarian regulators, there’s a good chance OneCoin has tripped money laundering filters with US financial institutions. And this has no doubt placed them on the regulatory radar.
Pre-empting a shutdown, OneCoin no doubt hope that ceasing to solicit investment from within the US will fend off regulators. They’re probably also hoping that by cutting off transactions from US banks, that their new bank won’t terminate their accounts in alarm.
Whether or not that ploy works out for them remains to be seen. But in the meantime two facts can not be ignored:
Firstly, BitCoin and cryptocurrencies are totally legal in the US.
Secondly, if OneCoin feel they can’t operate legally in the US, they are all but confirming to their investors they are running a Ponzi scheme.
SEC registration is a matter of filing paperwork, so any notion that this is some sort of drawn-out process is a bald-faced lie.
Looking forward, the status of OneCoin’s US investors and what is to become of their OneCoin balances is unclear. Ditto the planned Las Vegas event on October 16th.
Update 7th October 2015 – In a US affiliate call held overnight, Sal Leto has confirmed OneCoin have cancelled the Las Vegas event.