No.1 Crypto Scam OneCoin: Police in Chinese City Bust €1.9 Billion Pyramid Scheme
Police in China’s central city of Hunan province recently busted a cryptocurrency pyramid scheme that amassed 15 billion yuan (€1.9 billion) and arrested 119 suspects across 20+ provinces and cities.
According to a reported from local media source on Monday, the scheme is related to the notorious No.1 crypto scam – OneCoin. Founded by a Bulgarian woman, Ruja Ignatova, OneCoin entered China in September 2014. In this case, 15 billion domestic funds and more than 2 million accounts were involved. Police set 14 special investigation teams in those worst-hit cities and started the investigation in March 2016 after Hunan police received complaints from locals saying some people were involved in pyramid schemes in a local hotel.
So far the No.1 crypto scam in the country was cracked. Police found that there are over 10.77 million OneCoin accounts worldwide, among which 1.47 million accounts are based in mainland China; The scam lured €15.86 billion from 4.8 million worldwide investors, among which €1.9 billion are from 1.42 million Chinese investors with 79 levels in the colossal multi-level marketing structure.
Though it is promoted as a cryptocurrency, OneCoin is actually not a cryptocurrency, unlike bitcoin which runs on open-source software and has a public ledger. OneCoin is globally considered a Ponzi scheme, both due to its multi-level marketing structure and many of the people who are central to OneCoin have previously been involved in other similar Ponzi schemes.
The company is registered officially in the United Arab Emirates as “OneCoin Ltd.,” but according to the Bulgarian police report, the company operates through
“Hundreds of affiliated companies on 4 continents… (which) are being investigated in England, Ireland, Italy, the U.S., Canada, Ukraine, Latvia, Estonia, China, India and many other countries.”
Although its servers were shut down and founder accused, OneCoin currently still remains operational. And innocent investors keep falling in it despite the massive international media exposure and warnings from authorities. For ordinary people in China, Onecoin is really beguiling and luring as its team claims its “currency is comparable with Bitcoin.”
Early in 2016, several members and investors of OneCoin were arrested and $30.8 million USD of assets were seized then in the country.
In December of the same year, state broadcaster China Central Television warned the public that OneCoin was one of more than 60 virtual currencies that exploited the concepts of blockchain technology and digital assets to lure people into a pyramid scheme.
But the scam was unabated and more investors fell into this trap.
In February 2017, OneCoin attracted widespread attention after news broke that Chen Man, who was wrongfully imprisoned for murder, has been swindled and spent 1 million RMB state compensation on the OneCoin investment.
In December 2017, the Zhuzhou Intermediate People’s Court in Hunan ruled that OneCoin was an illegal pyramid scheme. The verdict also revealed that the organization had charged membership fees ranging from 130 up to 36,330 euros. Law enforcement confiscated more than 1.6 billion yuan from the criminal network.
The arrest is another crackdown on alleged cryptocurrency fraud in China as law enforcement in the country have beefed up efforts to battle illegal fundraising. According to the recent reports by 8btc, police in China’s northwestern city of Xi’An has cracked crypto pyramid scheme which amassed 86 million Chinese yuan ($ 13.7 million) swindling from 13,000 Chinese investors; and six Chinese men were arrested for running an RMB 300 million cryptocurrency Ponzi scheme in China’s southern city of Shenzhen.