The UK’s Financial Conduct Authority (FCA) has issued a warning against trading virtual currencies and has advised consumers to be wary of dealing with OneCoin, which claims to offer the chance to make money through the trading and ‘mining’ of virtual currencies.
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OneCoin, which operates online via the website www.onecoin.eu, markets itself as ‘a digital currency, based on Cryptography ’. It claims to have a finite amount of currency units which means it is unaffected by factors such as inflation, and that it is not bound by a central bank.
Background
Earlier this year, the UK tabloid The Mirror exposed a suspicious get-rich-quick scheme which claimed it could created 300 millionaires in a year. OneCoin was promoted as a rival to the market-leading Bitcoin , with a joining fee ranging from £100 to £28,000 ($130 - $36,348).
An audience who attended a recruiting event at a London hotel were told that it was a way to get very rich and that “The earlier you join, the more you make”.
They were also informed that they could more than double their money “even if the thing you’ve invested in stays at the same price” which was painted as the worst-case scenario and gushed about how €5,000 could turn into €37,710 as OneCoin rises in price.
However, the chance of OneCoin falling was not mentioned and the fact that there were no details on its website relating to where OneCoin was incorporated as well as the absence of any directors and shareholders raised serious questions as to the legitimacy of the scheme.
Why the FCA is Concerned
As a result, OneCoin is currently being investigated by the City of London Police. The FCA has confirmed that this firm is not authorised and although the watchdog does not believe it is undertaking any activities that require its authorisation, it is concerned about the potential risks that this firm poses to UK consumers who have no protection from the Financial Ombudsman Service or the Financial Services Compensation Scheme.
Members of the public who believe they have been a victim of fraud or have had dealings with OneCoin are advised to contact Action Fraud.
