We always say that investing in cryptocurrencies is a risky game. And that is not only because of the volatile nature of digital currencies.
Actually, there are more than 12,000 cryptocurrencies you can choose from. Some of them are a joke to the crypto world, and others are game-changing.
Volatility is one part of crypto investing. Another part is cryptocurrency scams. Unfortunately, there are many stories of fraudsters, and today we are looking at one of the biggest scams in the history of cryptocurrencies - OneCoin. Its leaders stole over $4 billion from investors all over the world.
What is OneCoin?
OneCoin is a Ponzi scheme posing as a cryptocurrency. It was launched by the Bulgarian self-styled cryptoqueen Ruja Ignatova in 2014. Millions of investors around the world were attracted in a two-to-three year period. The cryptoqueen used catchy messages and flashy launches to convince people in more than 175 countries to buy OneCoin tokens, as well as packages of educational materials. Many people believe that OneCoin is going to make them rich and will help them become a part of something huge. As it turned out, they became a part of the biggest crypto scam.
As you might guess, there never was a blockchain behind OneCoin. It used multi-level marketing to make people sell to their friends and family. Furthermore, the project has its own platform and was not traded on cryptocurrency exchanges.
Three years later, in 2017, authorities closed in on the scammers. Ruja Ignatova disappeared and has not been seen since. Her brother, who was also the CEO of OneCoin, was arrested.
The lesson
And while OneCoin is really one of the biggest scams ever, we can try to learn from it. Here are some ways, we can protect ourselves:
Research the leadership
Before you invest in any project, crypto or not, do good research. Check out its leadership and see their previous projects and history.
Believe it or not, OneCoin was not the first scam of Ruja Ignatova. In 2014, she already had fraud charges pending in Germany, and in 2015 authorities in some countries were starting to question the legitimacy of the project.
Be careful if you see that critics are dismissed
OneCOin encouraged investors to become a part of small communities, and cut anyone who didn’t believe in the project. Any critical news or voices were dismissed.
Those kinds of tactics seem really strange, and you should be aware if you notice such behavior.
Use a trustful cryptocurrency exchange
OneCoin used its own exchange, and that is how it managed to hide the fact that it isn’t a true cryptocurrency. Big exchanges have a limited list of coins, and there must be a good reason why a coin is not available in major apps and exchanges.
Look beyond the hype
Don’t trust the PR behind a project. Always do your research and search for projects that have a long-term strategy.
Do not fall for promises of high returns
As we know, nothing about cryptocurrencies can be predicted. Of course, some projects can generate great returns, but if a coin promises those high returns, that is a red flag.
Be careful
Unfortunately, cryptocurrencies have all the ingredients of a great scam. However, in 2022 we have major access to information of all kinds. It must be easier to notice a fake project than it was years ago. We can, and we should do good research before investing, so we don’t become a part of scams like OneCoin.