onecoin-logoIf you thought OneCoin’s bitcoin announcement was a conveniently timed distraction from a Chinese crackdown on the scheme… you’d be half right.

Turns out there might be a much more serious problem for OneCoin behind the decision.

According to OneCoin, the decision to start accepting bitcoin investment

was made after careful monitoring of the market trends, which show that more and more people are seeking alternatives to bitcoin, since the currency has shown a rapid decline after crashing in value in 2015.

Putting aside the fact that the value BitCoin has doubled in the last twelve months, the real reason OneCoin are now accepting bitcoin is because they just lost their credit card processing merchant.

As of May 1st, 2016, new and existing OneCoin investors who attempt to deposit funds into the scheme via credit card are advised the service is “temporarily out of service”:

credit-card-processing-suspended-onecoin-may-2016

Since late 2014, OneCoin has been laundering invested funds through China UnionPay. Among other things, China UnionPay provided OneCoin their credit card processing service.

A secret report leaked to the Chinese media reveals the People’s Bank of China, the central bank of China ‘with the power to control monetary policy and regulate financial institutions‘, recently issued a directive aimed at combating cryptocurrency fraud.

As part of the bank’s “strengthening of bitcoin risk prevention work” policy, Chinese “banks and third-party payment processors” had been ordered to “close all account transactions associated with bitcoin platforms” by April 15th.

It is believed the directive applies not only to bitcoin but all cryptocurrencies.

How concrete the April 15th deadline was is unclear, but it explains why OneCoin are no longer accepting credit cards and have instead opened up bitcoin.

China UnionPay have cut OneCoin off and desperate times call for desperate measures.

Up until recently China has been somewhat of a wild west for cryptocurrency transactions. This has meant MLM Ponzi schemes abusing the niche have been able to flourish through Chinese financial institutions.

Faced with the prospect of establishing new banking relationships elsewhere, OneCoin no doubt now finds itself between a rock and a hard place. Previous efforts to establish banking channels outside of China by OneCoin have lasted a few weeks at best.

In conjunction with Chinese authorities actively investigating the scheme and arresting investors, the loss of credit card processing will no doubt see new investment funds flowing into the scheme drastically reduced.

What that means for existing OneCoin investors, whose ROI payouts rely on ever-increasing new investment, remains to be seen.