Today 10th of April, two men were charged in a Singapore based court for using a fraudulent cryptocurrency termed as OneCoin to promote a multi-level marketing scheme. The charge followed an investigation carried out by the Singapore Police Force (SPF), a Commercial Affairs Department.
According to the information given by the police, one of the two men was also charged for incorporating a company called One Concept Pte Ltd so as to promote the scheme. This happens to be the first time such a crime has taken place in Singapore. The residents had participated in the scheme by buying online educational courses that came with promotional tokens which could be used to mine for the OneCoins.
The SPF said in the statement;
“The promotional tokens could be used to ‘mine’ for OneCoins. Participants who brought in new participants were also entitled to overriding commissions in contravention of the Multi-Level Marketing and Pyramid Selling (Prohibition) Act.”
Despite the fact that OneCoin shares some similarities with Bitcoin, the two have some quite significant differences. Unlike Bitcoin, the platform does not have a per-to-peer network. This means that mining can only be carried out by the company. The platform is a pyramid scheme that enforces the principle of multi-level marketing, a factor that raises many questions concerning the coins legality.
In 2015, Bulgarian Konstantin Ignatova founded OneCoin in Bulgaria; however, the U.S. has termed OneCoin as a fraudulent crypto. The U.S. together with several other countries has issued warnings to residents against using the crypto. The U.S. government went as far as announcing criminal charges against the platform’s founder and his sister Ruja Ignatova.
As accused, the two mislead investors by convincing them that the value of OneCoin was determined by supply and demand while in fact, it was determined internally.
The SPF has advised Singapore residents not to promote or participate in any multi-level marketing schemes involving either One Concept Pte Ltd or OneCoin.
The two men may be prosecuted under the Multi-Level Marketing and Pyramid Selling (Prohibition) Act, charged with a maximum jail term of 5 years along with a maximum fine of S$ 200,000 each.