THE ONECOIN STORY
WHAT WAS ONECOIN?
WHY WAS THE FRAUD SO SUCCESSFUL?
WHY WAS THE FRAUD SO SUCCESSFUL?
OneCoin was a crypto-currency scam led by a Bulgarian Dr Ruja Ignatova. The scam was to launch and promote a fake crypto currency called OneCoin with the promise that it would become even more successful and popular than Bitcoin and would deliver stellar returns to it's investors.
It was a scam that was fuelled by (Multi Level Marketing) MLM actors and was so convincing that thousands of investors around the world lost about 5 billion dollars falling prey to it.
Ignatova disappeard in October 2017 and has not been seen or heard ever since.
BBC Sounds have published a podcast called the Missing Crypto Queen. It is worth a listen.
WHY WAS THE FRAUD SO SUCCESSFUL?
WHY WAS THE FRAUD SO SUCCESSFUL?
WHY WAS THE FRAUD SO SUCCESSFUL?
There were three key factors.
Firstly, Ruja Ignatova, a Bulgarian educated in England and living in Germany looked absolutely legitimate with her credentials fully vouched for. She was the face of OneCoin and always presented herself as someone who has caught onto something big and wanted to share her good fortune with others.
Secondly, returns promised were sky high. This was a time when Bitcoin was approaching $100,000 per coin and the demand and euphoria were equally intense. Many people were bought into the dream and invested their life savings so that they could reap very high returns.
Finally, it was marketed heavily with Ignatova performing concert style launches where thousands would attend to meet up. Her enigmatic character fooled many, many people into believing in her dream and wanting to be a part of it.
tHE onecoin MORAL
WHAT LESSONS CAN WE LEARN?
WILL THERE BE OTHER CASES LIKE THESE?
WILL THERE BE OTHER CASES LIKE THESE?
As we have always said in this forum, the key of investing is to understand what we are getting into with a Margin of Safety mindset. Pyramid schemes and scams have always existed. They prey on the individuals's hopes and aspirations and a desire to secure a better financial future.
However, not doing the homework is a sure fire way to introduce immense risk. For example, in the OneCoin case, the first question should have been that a OneCoin bought with fiat currency but be transferrable back to the fiat currency - with either a gain or a loss. There should have been some form of a trading platform. Secondly, if the returns were so high, what was the risk assessment ? Thirdly, the backend blockchain technology turned out to be simple SQL (Structured Query Language), nowhere as foolproof as blockchain is.
Finally, everyone should have been cognizant of the euphoria surrounding OneCoin - it is a state of mind where good decisions are seldom made.
WILL THERE BE OTHER CASES LIKE THESE?
WILL THERE BE OTHER CASES LIKE THESE?
WILL THERE BE OTHER CASES LIKE THESE?
Undoubtedly there will be more Madoffs and Ignatovas.
Madoff took money from feeder funds and simply did not invest, Ignatova created a smokescreen.
They key is to remain aware, vigilant, tuned in and sceptical on any investment that is promising returns that are out of kilter with the market.
The best defence against crooks and scammers is our awareness that they exist.
It feels awful to be conned or scammed by scoundrels and scallywags - and they have a far reaching negative impact on our psychological and mental health.
We urge readers to be super cautious, super careful and not believe everything that is being promised.
If the deal turns sour, remember we are the ones who pay for it with our hard earned savings.