What We Can Learn From OneCoin, The Biggest Crypto Scam
Investing in cryptocurrency can be an adventure. There are over 12,000 coins to choose from, the market can show dramatic gains or losses in a single day, and crypto projects range from global change to ridiculous.
Volatility is an integral part of crypto investing. Getting caught up in cryptocurrency scams shouldn’t be. Unfortunately, the short history of crypto is already littered with stories of scammers, and OneCoin was one of the biggest. OneCoin executives have stolen more than $ 4 billion from investors around the world over several years.
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What was OneCoin?
OneCoin was a Ponzi scheme masquerading as a cryptocurrency. Launched by self-proclaimed crypto-queen Ruja Ignatova in 2014, the scam has attracted millions of investors over a period of two to three years. Through flashy launches and eye-catching messages, glamor Ruja has convinced people in 175 countries to buy educational material packages and OneCoin tokens. She told people they were going to get rich and made them believe they were part of something big. Unfortunately, the “something big” turned out to be a big scam.
OneCoin claimed to be a cryptocurrency, but it never even had a blockchain behind it. He used multilevel marketing (MLM) to get people to sell to their friends and family. The project was not traded on cryptocurrency exchanges – it had its own platform.
In 2017, as authorities around the world approached the crooks, Ruja Ignatova went missing and has not been found since. His brother, who took over the management of OneCoin, was later arrested.
If you think this all sounds like the plot of a movie, Hollywood is okay with it. Apparently there is a movie called False In progress. And the scam is already the subject of an excellent nine-part BBC podcast titled The missing cryptoreine.
Lessons we can learn from OneCoin
No one wants to be scammed, even if they know it strength to arrive. Here are some ways to protect yourself.
Seek the leadership of a project
Before investing in anything, whether it’s a cryptocurrency or a stock, check the leadership. It’s unclear whether internet searches in 2014 would have shown this, but Ignatova already had fraud charges pending against her in Germany. As early as 2015, the authorities of different countries began to question the legitimacy of the project.
Beware of projects that label reviews as “hateful”
OneCoin has encouraged investors to join small communities run by OneCoin sellers. It was almost like a cult indoctrinating its clients to believe only the good of the project. All critical press articles or voices from outside these groups have been labeled as hateful and rejected.
If you are on an investment forum that uses similar tactics, be careful. It’s easy to get emotionally carried away, especially when your money is on the line. But investigative journalists rarely criticize a project just for fun or because they don’t like someone. Listen to reviews and rate their comments. You can then decide for yourself whether their argument is valid.
Use a reputable cryptocurrency exchange
OneCoin hid the fact that it was not a real cryptocurrency by only trading on its own exchange. Large exchanges have fairly limited coin lists, so there are often good reasons for a coin not to be available in major U.S. cryptocurrency exchanges and apps. You should always try to find out why the part is not easy to buy and don’t trust a part that only works on its own exchange and nowhere else.
Look beyond the crypto hype
As the crypto industry grows, we are seeing more and more PR-led projects. Celebrity paid mentions are just the tip of the iceberg as currencies try to entice unwary investors into buying their coins. Do your own research and look for projects that have utility and a long-term strategic roadmap.
Another simple method is to search the Internet “[token name]”and” scam “.
Don’t be fooled by promises of high returns
As we have seen in crypto this year, certain investments can generate extraordinary returns. If a part promises these high returns however, that’s a definitive crypto red flag. No one can perfectly predict whether the price of a cryptocurrency will rise.
It’s different if it’s a Decentralized Funding (DeFi) project or if you bet your coins to earn rewards for contributing to the overall security of the network. These are often legitimate ways to earn interest on your assets. But even then, make sure you understand how that promised income will be generated.
Invest only the money you can afford to lose
One of the heartbreaking aspects of the BBC podcast was the interviews with people who put everything they had in OneCoin. Worse, some had even borrowed money. In Africa, where vendors targeted remote farmers at harvest time, families sold land and livestock to participate in the program.
Even if an investment seems like an opportunity not to be missed – indeed, above all if this seems like an opportunity you should not miss, don’t borrow money to invest in it. The risk is just too high.
Don’t let scammers take your money
Unfortunately, cryptocurrency has all the makings of a big scam. It is based on technology that many investors do not fully understand. There is little regulation to prevent people from lying about their plans or manipulating the market. And this year the headlines have been full of stories of huge rewards and crypto millionaires.
This makes it easy for criminals to build believable and tempting stories. They want to create a situation where people are afraid of missing out on a great money-making opportunity. But if you arm yourself with knowledge and a critical mind, you are less likely to give them your money.