Korean regulator reports OneCoin to authorities for “possible fraud”
As per a report from the Korea JoongAng Daily, authorities in Korea have launched a police investigation into OneCoin.
The report cites Kim Sang-rok, a director at (the) Illegal Finance Monitoring Department, who stated
We asked the authority to investigate an organization that collected fund from investors by advertising that OneCoin’s price will go up [like bitcoin].
The Illegal Finance Monitoring Department is part of the Financial Supervisory Service, South Korea’s top financial regulator.
The announcement follows the arrest of King Holdings executives last month, who were touting what sounds like a similar Ponzi points scheme to OneCoin.
They reportedly scammed some 1,500 investors and stole more than 18 billion won from them by selling “KCoin,” a type of digital currency issued by King Holdings.
The company sold KCoin by telling the investors that they could use it for payments at local theaters or coffee shops, as well as designated online shopping sites and hotels.
The company reportedly paid investors cash or coin when they recruited new investors. But a police investigation showed the company had no affiliates where investors could use the currency for purchases.
OneCoin’s business model also pays affiliates to recruit new affiliates, based on the premise OneCoin will forever increase in value (as set by the company).
The company does operate the DealShaker platform, however this only allows OneCoin affiliates to trade goods and services for OneCoin and cash. Like KCoin, OneCoin has never been accepted by truly third-party merchants.
The FSS’s investigation into OneCoin follows complaints received from all over Korea.
The FSS said that main target of fraudulent schemes involving cryptocurrencies are the older population.
Traders reportedly trick their targets by showing them news articles about Bitcoin and telling them that their digital currencies have similar potential.
The complaints likely followed OneCoin’s closing of their internal xCoinx exchange back in January.
xCoinx was the only way for affiliates to cash out their OneCoin point balances. OneCoin is believed to have closed the exchange as affiliate withdrawal requests exceeded the rate of newly invested funds.
At a recent promotional event in Macau, Founder Ruja Ignatova classified 95% of OneCoin affiliates are speculative investors. Ignatova strongly encouraged these affiliates to convert their OneCoin points into OFC virtual shares.
Like OneCoin, the OFC virtual shares have no value outside of the income opportunity. Nor can affiliates convert them into cash.
How OneCoin intends to generate revenue such to pay affiliates their represented OneCoin balances in fiat currency remains to be seen.
In the meantime, it is the inability to convert OneCoin into real money that is likely fueling regulatory complaints from affiliates.
Leave a Reply...