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Authorities Are Closing in on Alleged Cryptocurrency Ponzi Scheme OneCoin

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According to an official statement, OneCoin offices in Sofia were recently raided by law enforcement agencies as part of a joint operation between Germany and Bulgaria. Evidence was collected from the Sofia-based OneCoin subsidiary, One Network Services, where 50 people were questioned but no arrests were made. The Bulgarian authorities have also searched 14 other companies associated with One Network Services.

During a press briefing, Bulgarian prosecutors said,

“[…] About three million people have subscribed for the educational packages offered by OneCoin. […] While bitcoin is decentralised, the so called cryptocurrency OneCoin is centralised.”

Why is OneCoin a Scam?

The OneCoin MLM scheme operates like most Ponzi schemes. In order to make money, new users are expected to bring in new people into the network. Users reportedly earn a ten percent commission on anyone they signup. Six percent of the commission is directed to a cash account, while four percent is directed to a mandatory account. The mandatory account allows users to purchase more tokens or to upgrade packages. The more packages you purchase, the more tokens and splits you get. Additionally, withdrawing money is expensive and it is based on the number of active referrals a user has.

Suspicion further increases when you look at the OneCoin website. The website has grammatical errors and it falsely promotes OneCoin as a cryptocurrency. The “currency’s” compliance policies such as know your customer (KYC) and audit reports are also falsely promoted on the site. In other words, an already fraudulent company claims to protect its customers against criminal activities and it claims to frequently audit blockchain transactions where blockchain technology is not even being used. For a “currency” that claims to be the bitcoin killer, OneCoin does not use any of the protocols that other cryptocurrencies use. Furthermore, the website attempts to advertise the One Ecosystem as an exchange, a Forex, a charity, an e-commerce platform, an academy, a payments platform, and a business app solution all rolled into one.

The founder and “visionary” of OneCoin, Dr. Ruja Ignatova, has been arrested and taken to court by the German authorities for her involvement in the scheme. The legitimacy of her Law and Economics degree, which she supposedly earned from Oxford University in 2004, has also been put in question while TheMerkle reported that “Dr. Ruja’s employment with different companies prior to founding OneCoin remains a big mystery as well.” Other red flags include OneCoin’s centralised nature where you can only buy the “currency” from OneCoin companies.

African Central Banks Have Warned About OneCoin

In Africa, the Bank of Uganda and the Central Bank of Nigeria have warned citizens to be wary of OneCoin. Unfortunately, despite shutting down the Sofia servers, OneCoin operations are still going on through the affiliates of OneCoin Ltd, which is registered in the UAE. Therefore, OneCoin could potentially cause greater financial ruin for Africans than MMM Global already has.

Hence, it is important to stay away from these type of “multi-level marketing” cryptocurrency schemes that promise high returns but are in reality nothing more than pyramid schemes.

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BitMinutes to Reduce Cost of Money Transfer With Blockchain in Nigeria

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US-based blockchain company, BitMinutes Inc., has launched a blockchain token and an agent network in Nigeria to lower the cost of transferring money and to ease access to micro-loans.

BitMinutes Enters the Nigerian Market

In January, BitMinutes announced a partnership with BODC Trading & Investment Company in a bid to enter the Nigerian market.

BitMinutes would be offering people in the country the ability to purchase goods and services with BMTs, send them to friends and family, and convert unused mobile phone minutes into BMT which could then be turned into Naira for deposit into a bank account. Moreover, in the future, Nigerians will also receive access to micro-loans backed by BitMinutes tokens.

After just two months in the country, the CEO of BitMinutes, Tom Meredith, says adoption has been on the up, according to a report by Business Post.

“We’re ecstatic that Nigeria’s citizens have embraced the BitMinutes Nigeria program. They recognise that the economic incentives, including five percent cash back on purchases of BitMinutes and 12 percent annualised return on those BitMinutes that remain in their account, are very compelling propositions,” Mr Meredith said.

Nigeria will serve as a trial point for BitMinutes before the company expands the business model across other countries on the continent.

The BitMinutes Token

BitMinutes LogoBitMinutes token (BMT) is a prepaid airtime minute on the blockchain. The prepaid minute is a real asset that can be traded and, according to the company, is already traded informally by mobile phone owners around the world.

This token is a cryptocurrency that facilitates free peer-to-peer cash transactions to users’ bank accounts and provides the ability to extend micro-credit and nano-credit to individuals and businesses that have limited access to capital and the traditional financial system.

The blockchain enables the tracking of token ownership and transactional records to build a credit score of users. And the inter-changeability between prepaid minutes and cash makes it possible to collateralise peer-to-peer loans.

BitMinutes’ Business Model

BitMinutesBitMinutes deploys a Trusted Agent Network (TAN) model to provide a physical presence for the network. The BitMinutes Nigeria team will drive the effort to identify and manage TAN Agents, which would be mostly small businesses.

These agents sell BMTs that can be converted to phone minutes on different local carriers and also help users to convert unused cell phone minutes into BMTs, which could be used for payments of goods and services at TAN retailers. TAN agents would also facilitate the process of giving microloans to users. The TAN program already has over 100 agents.

“We have been very pleased with the interest of Nigerians, both in becoming trusted agents and BitMinutes account holders,”

said Ravi Narain, the Director of the BitMinutes Nigeria program.

With only 40 per cent of Nigerian adults having a bank account, blockchain use cases like BitMinutes could play a pivotal role in the financial inclusion programs of the Nigerian government.

Nigerians are already one of the top adopters of bitcoin on the continent, using the cryptocurrency primarily for investment and remittance purposes. According to a recent Luno survey, which sampled over 1,000 Nigerians, 70 percent buy cryptocurrency as a form of investment while only 30 percent use digital currencies for payment and remittance.

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Nairobi Securities Exchange May List Africa’s First Cryptocurrency ETF

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Africa's First Cryptocurrency ETF

Kenya-based Badoer Group ADK ETF is gearing up to launch a crypto-based exchange traded fund (ETF) on the Nairobi Securities Exchange in the first quarter of 2019. If their application is successful, it would become Africa’s first cryptocurrency-backed ETF.

Africa’s First Cryptocurrency ETF

Badoer GroupBadoer Group ADK ETF, a private company incorporated in October, is reportedly finalising an ETF listing arrangement on the Nairobi Securities Exchange (NSE), according to a report by Business Today.

If approved, the NSE would regulate Badoer Group ADK ETF, giving ordinary investors regulatory protection to invest in the asset. About 50 percent of the total ADK in supply, which is 12.5 million ADK, would be available for the ETF.

The founder of ADK, Ricardo Badoer, has reportedly met with the NSE’s commercial director, Ms. Bahati Morara, and the head of Innovation and Project Management, Mr. Irungu Wagema to finalise the ETF listing arrangement.

The NSE is one of the leading securities exchange in East Africa with 66 listed companies and over $20 billion (KES 2.10 trillion) in market capitalisation.

Road to the First ETF

In 2018, there have been debates about whether or when a Bitcoin ETF will get launched. Many believe it will allow investors to diversify their investments without actually owning the assets tracked by an ETF. While others think it is just a distraction to the development of the technology.

Last month, the U.S. Securities and Exchange Commission (SEC) had stopped accepting public feedback on their Bitcoin ETFs policy review. The market regulator postponed decisions or denied applications to list various ETFs. The SEC cited issues like the volatility of bitcoin and rumoured manipulation of prices as obstacles.

However, in Sweden, XBT Providers already provide bitcoin and ether as exchange-traded products (ETP) on Nasdaq Stockholm, a major Swedish exchange. ETFs are one of the investment vehicles under ETPs.

Having crypto-based fund will make sense to many investors who were cautious of putting their money in an unregulated cryptocurrency market. ADK’s anticipated move with an African-based ETF could open the market to a lot more African investors and institutions.

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Egypt’s Central Bank is Considering Issuing a Digital Currency

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Egypt has reportedly joined the list of countries that have started studying the issuance of digital currency as an option or alternative for their fiat currencies. That makes Egypt one of the few sovereign countries in Africa to consider a national digital currency option, which is somewhat surprising given the country’s negative stance towards cryptocurrencies.

The “Egypt Coin”

egypt bitcoin exchangeThe Cairo-based news outlet, Amwal Al Ghad, reported that the sub-governor of the Central Bank of Egypt (CBE), Ayman Hussein, confirmed the prospect of government-issued virtual currency in a conference in Abu Dhabi. He said the bank is conducting a study in collaboration with some international financial institutions.

However, he did not disclose details about the proposed currency and did not address whether it would be traded between banks only or issued to the general public.

Amwal Al Ghad says the bank believes the digital currency could “lower the cost of banknote issuance and use of cash.”

State-Issued Digital Currencies

Many central banks all over the world have considered issuing their own digital fiat money, rather than support cryptocurrencies like bitcoin.

In July 2016, the Bank of England became one of the first institutions to analyse the possibility of state-issued virtual currency. Followed by central banks in Canada, Russia, China and Sweden among others, as well as the European Central Bank.

However, Tunisia was the first country in the world to put their national currency on a blockchain in a trial in 2015. The eDinar initiative did not receive enough backing to go beyond proof of concept but highlighted the interest of central banks in testing a blockchain-based currency system.

The following year, various news media wrongly reported that the Senegalese government issued a digital currency on the blockchain. It had issued an e-currency, the eCFA, but it was not created on a blockchain.

Making State-Issued Digital Currencies Work

The use of this progressive financial technology is a positive step forward to help unbanked people in Africa. Also, it could aid electronic payments and support a cashless society.

Still, some people have questioned the approach of these countries. Centralised blockchains with power concentrated with the central banks could impose limitations on general adoption. The allure of the blockchain technology in the first place is decentralisation, giving people freedom from the traditional centralised banking system.

The impact of a central bank issuing its own cryptocurrency is potentially disruptive, even on the business model of commercial banks. The most practical approach for most central banks, it seems, is to restrict the use of cryptocurrency within an inter-bank context.

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