The OneCoin cryptocurrency investment project has responded to a statement which said that it is a Ponzi or pyramid scheme.
OneCoin response was base on a report by the Central Bank of Samoa on May 14 2019, which said last month that OneCoin is a “hybrid ponzi-pyramid scheme” which “laundered money through New Zealand to Samoa” and was targeting local residents through churches. After the warning by the Observer, it said that it received a statement from OneCoin with claims and reasons it neither Ponzi nor pyramid scheme.
OneCoin first defines Ponzi schemes as arrangements where “revenue for old investors is generated through the investment of new investors.” It also said that, regarding legislation on pyramid schemes, “its origin and its express purpose is consumer protection.”
OneCoin makes the defense, therefore, that it, in fact, does not contractually require its agents, or Independent Marketing Associates (IMAs), to recruit other IMAs in order to earn their bonuses.
“IMAs’ success depends entirely on their personal commitment, abilities and effort. IMAs can obtain an educational package and can only receive a bonus for their marketing activity, meaning they are not obliged to incur any additional expenses or recruit a new IMA.”
Agents are not rewarded for the recruitment of new agents but for the “value of sales,” it adds.
OneCoin goes on to make the argument that because when IMAs join the scheme they sign a contract classifying them as “an independent, self-employed business owner,” they cannot be defined as consumers who are protected under general legislation.
The statement reads:
“The users which are part of the OneLife Network are NOT consumers. They are IMAs, meaning they are self-employed business owners.”
In effect, OneCoin says it’s not a pyramid scheme because any financial harm to agents can’t be classed under a dictionary definition of pyramid scheme, and it’s not a Ponzi scheme because, although heavily incentivized to do so, it’s not compulsory for IMAs to recruit new agents.
It also said that as a “centralized, closed source cryptocurrency” with “strict” anti-money laundering and know-your-customer rules, OneCoin “is much more compliant than decentralized [cryptocurrencies].”