The OneCoin, which is basically a digital currency investment project, continues to make huge waves in the crypto space. Interestingly, it has finally replied to the idea that it is either a pyramid or Ponzi scheme. However, it argues that its structure does not succumb to either definition.
A ‘Hybrid Ponzi-Pyramid Scheme’
In a previous report, the Central Bank of Samoa revealed last month that the aforementioned project could be referred to as a “hybrid Ponzi-pyramid scheme.” Its structure, according to the central bank, is all about laundering money through New Zealand to Samoa. Even more so, it would tend to target local residents through church establishments.
Following the infamous report, OneCoin reportedly released a statement as a response to the claim. In the statement, the crypto investment project tried to explain why it is neither a Ponzi nor pyramid scheme.
The statement first explains that Ponzi schemes simply refer to revenue for old investors. This revenue is basically generated via the investment of a new investor. As far as being a pyramid scheme, the project said that its origin and intent is to simply provide consumer protection.
OneCoin further tries to make its claims valid by suggesting that it does not necessarily contractually require its people. These individuals are better known as Independent Marketing Associates (IMAs). In a sense, and as per the explanation from the project, its people are not tasked to recruit others in an attempt to earn bonuses.
Defining Its Process
In the statement, the aforementioned project states that its IMAs gains success that totally depends on their own personal commitment. Even more so, this success can vary to some degree and is often dictated by the agent’s abilities and effort. It also explains that these IMAs are able to acquire an educational package and, more importantly, can only obtain a bonus for their marketing efforts. In other words, they are not really forced to recruit a new investor or incur additional expenses.
OneCoin states that when IMAs decide to join the project, they are automatically contracted and classified as independent and self-employed business owners. Based on this definition, these individuals are not consumers who can just be protected under general legislation.
To put it simply, OneCoin wants to inform the public it is neither a Ponzi or pyramid scheme. For starters, its activities do not result in any financial harm to its agents. Otherwise, it would be defined as a pyramid scheme. As far as being a Ponzi scheme, it cannot be defined as well. The company said that its IMAs are not required to recruit new investors.