Germany is cracking down on OneCoin, allegedly a ponzi scheme promoted as a private blockchain cryptocurrency, having issued cease-and-desist letter to associated companies. Simultaneously, OneCoin-affiliated lawyers are reportedly going after an activist Bitcoin blogger in Germany.
The German Federal Financial Supervisory Authority (BaFin) issued cease-and-desist orders to Onecoin Ltd (Dubai), OneLife Network Ltd (Belize) and One Network Services Ltd (Sofia/Bulgaria).
The financial authority ordered the companies to “dismantle their internet based ‘OneCoins’ trading system”, as well as to “end all sales promotion activities in Germany.”
One week prior, BaFin halted the operations of a OneCoin-affiliated payment processor, OneCoin Ltd., in Germany. It froze €29m in linked bank accounts.
German regulators argue OneCoin companies never received permission to conduct money transfer activities. Germany has been strict in comparison with other nations on digital currency activities. For instance, due to regulations, there is not a single publicly-known Bitcoin ATM in Germany. There are currently 735 in the U.S..
OneCoin markets its coin as blockchain-based, arguing it is better than Bitcoin because it can process more transactions. Due to major differences between Bitcoin and OneCoin, many believe the company, which has no open-source code and takes a significant period to deliver coins purchased via a waitlist, is a scam.
“In its decree of 5 April 2017, BaFin ordered IMS International Marketing Services GmbH to immediately cease and wind down its unauthorized money remittance business with investors in ‘Onecoin’ for Onecoin Ltd.,” explains the German supervisor’s office. Bafin could impose fines in excess of 1.5 million euros for non-compliance.
Bafin’s report details: “On behalf of Onecoin Ltd, IMS International Marketing Services had investors who had bid to buy ‘Onecoins’ and transfer the sales to various accounts held by IMS International Marketing Services with different banks in Germany and forwarded the money on behalf of Onecoin Ltd to third parties, based in particular outside of Germany. This kind of financial service is classified as money remittance business.”
Despite the platform’s troubles with authorities, OneCoin’s lawyers have targeted online bloggers. “This is the most important post on this blog and the future of the website depends on it,” writes German language bitcoin blog Coinspondent founder, Friedemann Brenneis. “Please read it.”
He is a freelance journalist whose works have appeared in Deutschlandradio and Die Zeit. He started Coinspondent in early 2014.
Mr. Brenneis claims OneCoin, the digital currency ponzi scheme, is going after him in a court of law. “Onecoin lawyers with constructed allegations want to shut me up.”
The blogger has different ideas, however. “I want to turn it around and expose the OneCoin representatives in public.”
He needs his reader’s support, and is currently trying to raise funds for his defense and promising to pay them back if the case does not go to court or if he is rewarded lawyer fees.
OneCoin lawyers sent the blogger two “Abmahnungs” , which are written warnings under German law demanding the recipient sign a declaration that he will abstain from something or be sued. “I have received legal letters from several(!) Onecoin lawyers that are extremely irritated about an article I have published,” Mr. Brenneis wrote.
The blogger received one Abmahnung from Hamburg (pdf), and one from Cologne (pdf). His web host also received one, threatening charges of “Störerhaftung”, a German legal term which makes web hosts responsible for content hosted on their websites.
“Pretty heavy artillery against a little blog as this one,” writes Mr. Brenneis. “They might have just quickly sent a mail asking for clarification. Obviously, that is not what the Onecoin side wants.”