Financial watchdogs and police are warning investors to stay away from a virtual currency scam sweeping Europe.
The UK Financial Conduct Authority (FCA) and The City of London Police allege the online currency OneCoin is a scam.
OneCoin follows the model of other virtual currencies, such as the much wider known Bitcoin.
However, promoters claim the amount of OneCoin available is infinite and the value is unaffected by inflation or regulation.
Users have to mine the currency by solving complicated mathematical questions, but unlike Bitcoin, which has a transparent security process that allows miners to deposit and value their coins, OneCoin has no independent valuation procedure.
A statement from the FCA says police have an ongoing investigation into OneCoin.
Mystery over OneCoin transparency
Meanwhile Belgian regulators have announced that OneCoin promoters have misrepresented their relationship with the country’s Financial Services and Markets Authority.
“The FSMA wishes to warn the public that OneCoin has not received any form of recognition whatsoever from the FSMA,” said a spokesman for the regulator.
“The same is true of the persons who are promoting OneCoin: they do not hold an authorization or any other form of recognition from the FSMA.”
In Sweden, Bitcoin promoters pulled no punches with their opinions.
“OneCoin is not like the crypto currencies compared with, such as Bitcoin. Without an inspectable block chain, open break and independent venues so it is impossible to independently ensure that OneCoin not a scam or a pyramid scheme,” said Swedish Bitcoin Foundation chairman Mars Henricson.
Call for scam victims
Other industry experts accuse OneCoin of being nothing more than a pyramid selling scheme.
“OneCoin is a simple recruitment-driven pyramid scheme, backed with a residual binary compensation structure,” said online analysts MLM.
“Masquerading as a crypto-currency, OneCoin’s OneTokens are nothing more than Ponzi points. The more people join the OneCoin concept, the higher the popularity and value of the currency.
“The more popular OneCoin is, the higher the value of the cryptocurrency.”
It seems evidence is stacking up against the legality of OneCoin and if the virtual currency is really an elaborate Ponzi scam waiting to unfold on investors.
Meanwhile, City police are asking OneCoin investors to come forwardif they believe they are victims of fraud.