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What We Can Learn From OneCoin, Crypto's Biggest Scam – Motley Fool

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Cryptocurrency investing might be an journey. There are over 12,000 cash to select from, the market can publish dramatic beneficial properties or losses in a single day, and crypto tasks vary from the world-changing to the ridiculous.

Volatility is an element and parcel of crypto investing. Getting caught up in cryptocurrency scams should not be. Sadly, crypto’s quick historical past is already suffering from tales of fraudsters, and OneCoin was one of many greatest. OneCoin’s leaders stole greater than $4 billion from buyers world wide over a number of years.

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What was OneCoin?

OneCoin was a Ponzi scheme posing as a cryptocurrency. Launched by self-styled cryptoqueen Ruja Ignatova in 2014, the rip-off attracted tens of millions of buyers over a two-to-three 12 months interval. Via flashy launches and catchy messaging, the glamorous Ruja satisfied individuals in 175 nations to purchase packages of instructional supplies and OneCoin tokens. She advised individuals they have been going to get wealthy and made them imagine they have been part of one thing huge. Sadly, the “one thing huge” turned out to be an enormous rip-off.

OneCoin claimed to be a cryptocurrency, however it by no means even had a blockchain behind it. It used multi-level advertising (MLM) to incentivize individuals to promote to family and friends. The mission was not traded on cryptocurrency exchanges — it had its personal platform.

In 2017, as authorities worldwide closed in on the scammers, Ruja Ignatova disappeared and has not been discovered since. Her brother, who took over as OneCoin CEO, was later arrested.

In the event you suppose all of this sounds just like the plot for a film, Hollywood agrees. Apparently, there is a movie known as Faux within the pipeline. And the rip-off is already the topic of a superb nine-part BBC podcast known as The Lacking Cryptoqueen.

Classes we are able to study from OneCoin

No one desires to fall sufferer to a rip-off, even when they understand it would possibly occur. Listed below are some ways to protect yourself.

Analysis a mission’s management

Earlier than you put money into something, whether or not it is a cryptocurrency or a inventory, try the management. It is arduous to know if web analysis in 2014 would have proven this, however Ignatova already had fraud fees pending in opposition to her in Germany. As early as 2015, authorities in numerous nations have been beginning to query the mission’s legitimacy.

Watch out for tasks that dismiss critics as “haters”

OneCoin inspired buyers to affix small communities led by OneCoin salespeople. It was virtually like a cult that indoctrinated its clients into solely believing the nice concerning the mission. Any important information articles or voices from outdoors these teams have been labeled as haters and dismissed.

In case you are part of an funding discussion board that makes use of comparable ways, watch out. It’s straightforward to get emotionally drawn in, particularly when your cash is on the road. However investigative journalists not often criticize a mission only for the enjoyable of it or as a result of they do not like somebody. Take heed to the critics and consider their feedback — then you may resolve for your self if their argument has advantage.

Use a good cryptocurrency trade

OneCoin hid the actual fact it wasn’t a real cryptocurrency by solely buying and selling by itself trade. Massive exchanges have fairly restricted lists of cash, so there are sometimes good causes for a coin to not be accessible from major U.S. cryptocurrency apps and exchanges. It is best to at all times attempt to discover out why the coin is not straightforward to purchase, and do not belief a coin that solely works by itself trade and nowhere else.

Look past the crypto hype

Because the crypto business grows, we see increasingly PR-led tasks. Paid celeb endorsements are simply the tip of the iceberg as currencies attempt to tempt unwary buyers to purchase their cash. Do your individual analysis and search for tasks which have utility and a long-term strategic highway map.

One other easy technique is to go looking the web for “[token name]” and “rip-off.” You could discover unfair accusations from disgruntled buyers who misplaced cash when the worth fell, however the feedback are nonetheless price studying. Additionally use websites like Token Sniffer and Coinopsy, as they flag potential rip-off or lifeless cash.

Do not get seduced by guarantees of excessive returns

As we have seen in crypto this 12 months, some investments can generate extraordinary returns. If a coin guarantees these excessive returns although, that is a particular crypto red flag. No one can completely predict whether or not the worth of a cryptocurrency will improve.

It is totally different if it’s a decentralized finance (DeFi) lending-earning mission otherwise you’re staking your cash to earn rewards for contributing to the general community safety. These are sometimes legit methods to earn curiosity in your belongings. However even then, be sure you perceive how these promised revenues will probably be generated.

Solely make investments cash you may afford to lose

One of many heartbreaking elements of the BBC’s podcast was the interviews with individuals who’d put all the pieces they’d into OneCoin. Worse, some had even borrowed cash. In Africa, the place salespeople focused distant farmers at harvest time, households offered land and cattle to purchase into the scheme.

Even when an funding seems like an unmissable alternative — certainly, particularly if it seems like an unmissable alternative — do not borrow cash to put money into it. The danger is simply too excessive.

Do not let the fraudsters take your cash

Sadly, cryptocurrency has all of the components of a fantastic rip-off. It’s constructed on a expertise that many buyers do not fully perceive. There’s little regulation to cease individuals mendacity about their tasks or manipulating the market. And this 12 months, the headlines have been filled with tales of big rewards and crypto millionaires.

This makes it straightforward for criminals to assemble plausible and tempting tales. They wish to create a state of affairs the place persons are terrified of lacking out on a fantastic money-making alternative. However when you arm your self with information and important considering, you may be much less possible to provide them your cash.

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