Is OneCoin a Hybrid Ponzi-Pyramid Scheme? Crypto Company Says It Fits Neither
OneCoin cryptocurrency investment project has responded to widespread allegations going on in and around the cryptocurrency world that the project is nothing but a pyramid scheme. The firm laid the issue to rest once and for all saying that it does not fit the narrow definition of a bitcoin ponzi scheme.
According to a report credited to Samoa Observer on May 14, the apex bank in Samoa, the central bank of Samoa is quoted as saying last month that OneCoin is a “hybrid Ponzi-pyramid scheme” which “laundered money” through New Zealand to Samoa and its specifically targeting residents through the local churches.
Upon the publication of the report by the Samoa Observer, the news agency said it received a statement from OneCoin presenting its claim and explaining in clear terms, why it cannot be categorized as a Ponzi or pyramid scheme. The investment project firstly defined Ponzi schemes as an avenue where “revenues for old investors is generated through the investment of new investors.”
On the legislation of pyramid schemes, OneCoin maintained that ‘’its origin and its express purpose is consumer protection”.
OneCoin claimed that it does not require its agents or the Independent Marketing Associates to recruit other IMA’s in order to earn their respective bonuses.
OneCoin elaborately explained, stating that:
“IMAs’ successes depend entirely on their personal commitments, abilities, and efforts. IMAs' can both obtain an educational package and can only receive a bonus for marketing activity, meaning they are not obliged to incur any additional expenses or recruit a new IMA”.
Furthermore, it explained that its agents are not in any way rewarded for the recruitments of new agents but are rewarded for the “value of sales” it adds. Arguing further, OneCoin noted that when the IMAs came on board, they agreed to a contract classifying them as an ‘’independent self-employed business owner’’, so they cannot be classified as consumers who are protected under the general rule and legislation.
Not a Pyramid Scheme?
Noting that it is not a pyramid scheme, OneCoin stressed that any harm to agents cannot be classified under the dictionary meaning of a pyramid scheme and it is equally not a Ponzi scheme because, although incentivized to do so, IMAs are not under any form of obligation to recruit new agents.
The statement went further to brag about its transparency, stating that as a ‘’centralized, closed source cryptocurrency’’ and with its ‘’strict’’ anti-money laundering and know-your-customer- stance, it is far more compliant than decent raised cryptocurrencies.
Under the Microscope of the Law
It is worth remembering that the United States attorney for the Southern District of New York indicted the major leaders of the scheme, Ruja Ignatova and Konstantin Ignatov, on charges ordering on security and fraud, wire fraud and money laundering.
In related news, Bitcoin Exchange Guide reported earlier in the month that OneCoin was sued by an Ex-client on grounds of fraud and massive misrepresentation.
The cryptocurrency project also faced a lot of allegations such as unjust enrichment, security breach, fraudulent inducement, amid other degrees of accusations.