What is OneCoin and why is it considered a Scam?

If you read news often you must have come across a story calling bitcoin a scam. From banks to billionaires, there are people who really dislike cryptocurrencies. And true, not all cryptocurrencies are legit. More than 10 cryptocurrencies have come up and exited as scams in the last five years.

Think of OneCoin. A cryptocurrency so popular that more than $200 million was invested in the project turned out to be a scam. Or was it? Find out,

What was OneCoin?

OneCoin was a project by Ruja Ignatova, a Bulgarian-based investor. The company was highly promoted by Offshore Companies Ltd in Dubai and by OneLife Network Ltd in Belize. Its founder and team members promoted OneCoin as a private blockchain where users could purchase educational materials using OneCoin tokens.

From the start, the company used a multi-level marketing (MLM) scheme to lure investors. The educational materials were sold in packages so that if you had €100, you could purchase the starter package. If you had €5000 you could purchase the “Tycoon Trader” plan. Below is the company’s MLM scheme:

  • €100- Starter plan
  • €500- Trader Plan
  • €1000- PRO Trader plan
  • €3000- Executive Trader plan
  • €5000- Tycoon trader

There were other more expensive plans as well, with the most expensive plan costing $30,000. After purchasing a plan, OneCoin offered special tokens that could be used to “mine” OneCoin coins. As such, buying the company’s plans was an investment in the company and not a purchase of a cryptocurrency that held any purpose.

All Profits no Loss Promotion

So, here is how the company lured investors. The company claimed that the least amount of returns you could make was 100%. In several promotional meetings, OneCoin officials claimed that it was not possible to lose money even if the value of OneCoin went down.

Throughout the company’s promotional meetings, nowhere did Onecoin ever tell investors there was the possibility they could lose money. It was all about doubling and tripling their investments. At one meeting in London, OneCoin promoters told investors they could turn a $5000 investment into $40,000 with no risks.

In addition to that, there was the allure of referral marketing. For every friend you invited to buy a package at OneCoin you received 10%. If your friend purchased the €5000 package, you got €500. Ten referrals and you had €5000 in your account. Not even the biggest crypto exchanges offer such high bonuses.

Appealing to Greed

 OneCoin may have plagiarized all the materials they gave out to investors but they were experts at appealing to the greed of investors. Most investors are greedy after all but some investors are greedier and allow lust to compromise their judgment.

OneCoin’s approach to investors included statements like,

“I’m like you guys and I want to be rich.” Or, “I would rather cry in my Porsche than at the back of a bus.”

These are statements any investor would want to say and if there is a chance to earn enough money to buy a Porsche in one year, greedy investors would be willing to risk it all. OneCoin also had templates that showed some of their investors that allegedly earned up to $4 million per month. That was nearly $50 million in a year or $250 million after five years of working with the company.

False Claims

The company’s hype master, Kari Wahlroos, was shameless at making false claims. Kari wore flashy suits and shades everywhere he went but he also told lies almost always. Lying is a skill among scammers anyway and everyone at OneCoin seemed to have mastered the art.

Here are some of the false claims made by OneCoin and how they were proved to be wrong.

  • Empowering Millions of People

On the company’s website, the first notable false claim was that they empowered millions of people. In spite of the claim, Onecoin crypto was never featured in any exchange and neither was it used for any purpose.

The company’s founder, Ruja, appeared in several meetings where she repeatedly compared her company to bitcoin. She even cited Bill Gates and Richard Branson and claimed they would’ve invested in the project. Ruja never accepted questions though. It would’ve made the situation awkward, obviously.

  • Open and Honest

Scams don’t announce themselves; at least not by admitting their lies. Instead, OneCoin claimed to be open, honest and with a mission to make cryptocurrency trading transparent. Contrary to their claims, the company never revealed any credible information about how they worked.

The company’s founder and team members appeared on interviews but they rarely ever said how they made the ridiculous amounts of money. About wanting to make cryptocurrencies transparent, when were they ever not transparent?

  • Second Largest Cryptocurrency

It’s unbelievable that people fell for the lie. OneCoin claimed that it was the second largest cryptocurrency network after bitcoin with a market cap of $3 billion in 2016. The company knew not all investors were keen to do due diligence. The company peddled the lie throughout 2016 in spite of not appearing anywhere on Coinmarketcap or any other websites that rank cryptos.

  • Pressure Marketing

Greedy investors are the easiest to con. And when a seller uses pressure marketing as a tactic, it works incredibly. Basically, pressure marketing involves promising surprisingly great deals at low prices for a limited time only.

OneCoin could surprise investors with combo packages such that buying a $30,000 package before the end of the week promised returns worth a million dollars. But to add pressure to the investor, they would put an expiry date to the offer.

“Buy these tokens worth $30,000 now. They contain 500,000 tokens that will be worth $1.2 million after one month. The offer is limited and there will be no extension,” OneCoin’s Kari Warlhoos said at one time.

Considering that the cheaper packages didn’t promise anything like the combo package, some investors would fall into the trap. Call it the fear of missing out or classic pressure selling, but OneCoin was good at scamming investors.

In Conclusion

OneCoin was a fraudulent company that boldly peddled lies and took investors’ money without providing any genuine services. The company lasted for nearly two years and its founders accumulated over $200 million.

Like many scams, however, OneCoin didn’t last. More than 100 people affiliated to the company were arrested in Bulgaria and India and over $100 million was recovered. Many investors never got their investors back though, as it is the norm with investing in any scam.

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