OneCoin scam renews calls for crypto regulation

OneCoin scam renews calls for crypto regulation

The trial of crypto scam OneCoin's lawyer has renewed calls for robust regulation of cryptocurrency to address weaknesses of "human failure and human criminality".

Mark Scott, who has been accused of money laundering for the bogus cryptocurrency OneCoin, allegedly used offshore bank accounts and investment funds to hide the origin of $400 million worth of proceeds from the scam.

Scott is currently standing trial in New York, and has pleaded not guility to the claims, with defending lawyers stating his ignorance of the nefarious nature of OneCoin.

Operating like a pyramid scheme, OneCoin raked in $3.8 billion in revenue between 2014 and 2016, despite having no value and is one of the largest known cryptocurrency scams to date.

"OneCoin had all the ingredients of a scam," says Ahmed Ismail, CEO and founder of digital asset platform, HAYVN.

"The promise of unheard of investment returns, a seemingly bogus cryptocurrency, and a complete lack of regulatory oversight."

Ismail defends the nature of cryptocurrency and blockchain technology, describing it as "uncracklable and unhacklable," and that its weaknesses lie in "human failure and human criminality."

For cryptocurrency enthusiasts, the OneCoin scam will reiterate the need for crypto assets to be brought within the regulatory remit of bodies such as the FCA.

Iqbal Gandham, UK managing director of eToro, says: "Fraud has existed as long as finance has and all forms of investment are subject to scams.

"That’s why it is so important that consumers carry out checks to ensure the companies they are investing with are legitimate and why the authorities need to do everything possible to tackle scams and stay one step ahead of fraudsters."

The FCA appears to be taking a more hard line approach towards cryptocurrency trading, with a ban on the sale of crypto-derivatives to retail investors proposed in July.

It was reported by the FT last month that 87 crypto companies are currently under investigation by the FCA, compared to 50 a year ago.

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