The so-called cryptocurrency has been previously regarded as a scam, but this time, the fraud allegation reached institutional ears: the government of Italy has decided to ban the asset, which has been linked multiple times with a multilevel-Ponzi scheme.
The Italian authorities argue that the service provided by the company behind the ‘cryptocurrency’ doesn’t deliver what it promises to its customers. Since several months ago, the number of people and websites which label Onecoin as a scam has significantly increased. The scheme, led by Bulgarian lawyer Ruja Ignatova, is promoted by a Gibraltar-based company called OneLife.
OneLife calls Onecoin a ‘cryptocurrency’ when in reality the coin isn’t decentralized nor does it have a public ledger (a blockchain). The company uses a centralized database, and according to several users, it is currently using a mock-up website with dummy data to represent the ‘transactions’ being sent back and forward by the ‘network’.
Onecoin is closed-source, something very uncharacteristic in public blockchains. Bitcoin users and cryptocurrency enthusiasts all over the world are trying to raise their voices over this issue, as it might give a negative image to other digital tokens. In Italy, for the first time a public institution decided to take action.
The Italian Competition Authority (L’Autorità Garante della Concorrenza e del Mercato) has ordered to freeze all operations from Onecoin parent company (One Network Services Ltd.), describing the service as a multilevel scam. Authorities from countries like Bulgaria, Sweden, Finland, Latvia, and Norway are said to be actively investigating Onecoin over fraud allegations.
The Italian authority specifically warned about two websites dedicated to the selling of Onecoin tokens (including onecoinitaliaofficial.it), labeling their business as ‘illegal on Italian soil’. Public officials interviewed several members of the Onecoin scheme, they noted that none of them were able to successfully explain the exact nature of the business, nor able to justify the promised financial returns.
The Italian Competition Authority declared that an investigation is ongoing, and while it lasts, all activities associated with Onecoin parent company, including the selling, promotion, and issuance of the coin, will be prohibited.
Will the long lasting scam survive in the rest of the world? So far it is likely, but at least they won’t get away with it in Italy.