German Regulator Stops OneCoin Activity

Crime, FinTech, Investing, News | May 2, 2017 By:

Germany’s Federal Financial Supervisory Authority (BaFin) has issued cease and desist orders against three companies connected to OneCoin, an alleged cryptocurrency that has drawn law enforcement attention in several countries. The order is aimed at ending any activity related to OneCoin in the country.

The regulator issued cease and desist orders against OneCoin Ltd, Dubai; Onelife Network Ltd, Belize; and One Network Services Ltd, Sofia/Bulgaria. These three companies are part of a network of companies that market units of cryptocurrency under the “OneCoin” brand using a multi-level marketing structure in Germany and around the world.

The regulator’s cease and desist order comes into immediate effect, meaning operating a OneCoin business or promoting OneCoin is now completely illegal in Germany.

According to its official announcement: “[BaFin] issued cease and desist orders against Onecoin Ltd, Dubai, and Onelife Network Ltd, Belize, holding the companies to dismantle their Internet-based “Onecoins” trading system and to end all sales promotion activities in Germany immediately.”

Bafin said that the decision was based on the conclusion that the way these companies trade Onecoin as “virtual currency” in Germany falls under “Eigenhandel (own funds trading) of financial instruments” as outlined in the German Federal Banking Act (KWG). “Eigenhandel as a financial service would have required prior authorization by Bafin,” BaFin said.

Last month, BaFin has frozen the bank accounts of IMS International Marketing Services GmbH, OneCoin’s German partner, for operating without a license. According to the regulator, IMS engaged in money transfer operations on behalf of various OneCoin affiliated entities with the aim of gathering and forwarding investor funds. Although such activity is not illegal in Germany, it requires a license by law.