Onecoin: Classic Overpromise Gone Horribly Wrong

Being immersed in the cryptocurrency industry as deep as I am, I once again realize the validity of the old maxim: the road to hell is indeed paved with good intentions. And the OneCoin project should serve as a clear warning to those who doubt this age-old principle. In other words, whenever you see something too vocal, too obvious, too simple to understand and too easy to participate in, chances are you’re stepping into a world, from which you’d be much better off steering clear.

In September 2014 OneCoin popped up with a seductive goal of introducing into the word the one, the only cryptocurrency for all things digital. The message was so messianic and sexy that it was impossible not to succumb to its appeal. OneCoin’s Bulgarian-born Rina Ignatova promised the planet “to improve the lives of all people worldwide” by “giving [them] instant access to financial services.” To the simple folk, the “provision of the educational tools that simplify and demystify digital currency” meant very little. The overwhelming majority of the early backers wanted (and still do, actually; spoiler alert: OneCoin is still active) to get rich fast and the “team” behind the project was happy to oblige.

Naturally, I use the term “team” very loosely. From the very beginning, there was no identifiable team, and OneCoin seemed like an overtly illusive and artificially hyped-up scheme that because of the accessibility of its message and the grandeur of its promise had managed to raise $2.9 billion by February 2016. OneCoin boasted of a private blockchain supporting 120 billion tokens designed explicitly for speeding up mass-transactions. The OneAcademy Platform was presented as an ultimate educational tool for beginners. Miners got theirs as well: to mine OneCoin, the siren song went, you don’t need specialized equipment! OneCoin claimed it had inclusive and transparent relationships with governments of the world, all KYC documents in perfect order and a blockchain ready to be privately audited at the drop of a hat.

To the e-commerce people, OneCoin promised a unique cryptocurrency-based marketplace DealShaker. The social networking buffs got the OneLife platform. Stockbrokers and forex traders rejoiced at OneForex. The cloud-computing aficionados and philanthropists of all kinds were also kept in the OneCoin loop via CoinCloud and OneWorld Foundation, respectively.

But by the time a shrewd cryptocurrency enthusiast would get to the part of the OneCoin WP describing the channels of monetization of the project, the bells in their head would have to start ringing. Masked in all kinds of corporate linguistic goodness, there it was, the only real bullet point worthy of your attention: the new investors were thought to become the project’s financial lifeline. Revenue would have to come from funds raised during the ICO and the subsequent seed rounds funded by new investors. That’s it. Sounds familiar?

OneCoin began to snowball into oblivion when the Chinese police in March 2016 had noticed the project’s glaring lack of any attribute of a viable business project. In December of the same year, OneCoin was proclaimed by the Chinese state TV as one of sixty similar crypto enterprises that use the blockchain technology for unlawful and immoral gains. The news quickly rippled through the rest of the world, and the industry blogs unanimously labelled OneCoin a Pyramid scheme, which led to the outlawing of the project in Austria, India, Italia, and Samoa.

A year later, in December 2017, Zhuzhou Intermediate People’s Court in Hunan deemed the project straight up an “illegal pyramid.” The Court signed arrest warrants for a hundred and nineteen people associated with the creation and distribution of tokens, $250 million had been ceased from the network, which, apparently, is all the police were able to pluck from the massive total of $2.4 billion in investments.

The hammer continued to fall, and in January 2018 in the country of origin of CoinOne, Bulgaria, the main office of the organization had been raided, servers confiscated and fifty people questioned.

Amazingly, CoinOne is still active, and the token is traded on some exchanges.

Having said all that, I realize that CoinOne is nothing new or unique. The hype was created through the same old as the world itself technique of overpromising and underdelivering. Not to sound too dramatic but the most famous proponent of this kind of unsubstantiated, deceitful utopism was Adolf Hitler who could promise to big firms to curb small businesses, and to mom-and-pop shops to close down big department stores — all in one speech. So, when OneCoin went with this time tested practice of promising everything to everyone, somehow it managed to suck in quite a few “untrained” investors.

The significant role in the rise of OneCoin was played by the lack of understanding of the blockchain technology. For instance, when fictitious nonsense like “independent audit of a private blockchain” was being passed by the “team of creators” as a viable promise, the public was supposed to have caught them on a lie right then and there. That didn’t happen. Investors disregarded the many red flags the project had been throwing up the entire time and preferred to concentrate on a bright prospect of getting rich fast. In the end, everybody lost.

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Anton Shmerkin

Anton Shmerkin

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