Get ready for insanity when OneCoin fails

Thursday May 2 2019

Recruiters across the country’s major cities

Recruiters across the country’s major cities dupe Rwandans to send money into the Ponzi scheme. 

By Emma Kabanda

In October 1876, when Hamad bin Muhammad bin Juma bin Rajab el Murjebi aka Tippu Tip — the infamous Zanzibari slave trader — met the explorer Henry Morton Stanley, he warned him against trespassing into Rwanda’s warrior Mwami Kigeli IV Rwabugiri’s territory and instead circumvent it on their way to Congo.

Rwabugiri’s reputation not only kept away slave traders but commodity traders too; hence cowrie shells and Indian rupees used in the wider East African region took longer to reach the country and consequently the monetary economy.

Even when monetary as opposed to barter trade was introduced in Rwanda, the source of money and monetary wealth was not understood. There are those in our society who believe that there are some do-gooders overseas who have accumulated so much money that they are looking for Africans to share it with for no work done.

I am not referring to masses of motorcycle taxi riders biting their nails after betting on the results of a football match between two European football clubs and hoping to kurya umuzungu. Thousands of Rwandans have and continue to “invest” millions of hard earned Francs, after exchanging it into US dollars and Euros and sending it to a Ponzi scheme called OneCoin.

The fact that thousands of Rwandans have wired hard cash to Ponzi operators overseas in the hope of multiplying it speaks volumes about our peoples’ understanding of money and wealth and its sources. Despite all the available information, Rwandans continue to be duped into sending money into the scheme, which promoters refer to as cryptocoin that operates a private blockchain.

This follows the unfortunate losses incurred by those who were involved in QuestNet before 2009, TelexFREE scheme in 2014 and the D9 Club in 2017. Talk is rife of Rwandans who have invested varying amounts of money into OneCoin.

A mother has invested Rwf70,000,000 and is expecting “billions of francs” when “we share in June.”

A smartly dressed man tells me he sold his car, wired the proceeds and hopes to buy an SUV when he exchanges his “tokens” for cash whose value has multiplied several times.

Recruiters globally present OneCoin as a genuine business with an online membership platform that, “allows them to understand, mine and trade cryptocurrency, and make secure, low cost, cross border transactions.”

According to the promoters, OneLife Network (OLN), a global network born out of the OneCoin cryptocurrency brand “has a digital platform with a unique ecosystem of sophisticated products and social networking tools that help members achieve financial independence.”

Recruiters

In Kigali, recruiters encourage potential “victims” to invest in cryptocurrency by exchanging hard cash for “tokens” whose value increases exponentially and the amount of cash “invested” increases in tandem.

Currently, recruiters across the country’s major cities dupe Rwandans to send money into the Ponzi scheme. As way back as February 2017 Italian Antitrust Authority after investigations, banned all activities of OneCoin.

Bitcoin.com has referred to OneCoin as, “One of the Largest Digital Currency Scams.” The Hungarian Central Bank referred to OneCoin as a “pyramid scheme.” Indeed India, Sweden, China, Latvia, Vietnam, Bulgaria, Belize, Finland and others have investigated, made arrests, confiscated assets or made warnings against dealing with OneCoin.

OneCoin founder Ruja Ignatova went into hiding in 2017 after she was indicted for money launder- ing. Her brother Konstantin Igna- tov was arrested over wire fraud charges while her cofounder Sebastian Greenwood was arrested in 2018 in Thailand over an indictment for money-laundering $400 million.

Whereas victims of the OneCoin scheme may be dismissed as greedy get-rich-quick people when the scheme busts in future, the experience offers many lessons.

First, the fact that such nationwide forex haemorrhage can take place outside the loop of our financial services regulator and law enforcement is unfortunate.

Second, there are many Rwandans who are willing to postpone today’s consumption and save for the future, which national planners should tap into.

The Rwanda Stock Exchange for example should not operate like mature exchanges in London, Frankfurt, New York and others and thereby catering for the handful of companies of national repute some which may not need local capital, but should instead create a market that brings together small-scale operators (including start-ups) and potential local investors.

Third, our education system should teach our children that people get rich because they pro- duce and sell goods and services at a price that is over and above the cost of production.

The deep pockets of religious organisations and NGOs are therefore filled by donations from people who work hard and earn their money. Finally, we should prepare for the mental and social fallout from such schemes.

The psychological dangers of betting and its effect on relations, families and society in Rwanda have been reported. However, going by the reported scale of the sums of money, opportunity cost and expectations by those involved in OneCoin scheme Ndera psychiatric hospital should make new contingencies.

Emma Kabanda is an economist and social commentator based in Kigali. He can be reached on ekaba2012@gmail.com

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