My Opinion

The Bulgarian "OneCoin" inventor Ruja Ignatova has probably brought investors around 4 billion US dollars. From the "crypto-queen", however, lacks any trace and the FBI determined.

The alleged cryptocurrency "Onecoin" is at the center of the largest crypto fraud case yet, but the machinations have been discovered. According to investigators hundreds of thousands of investors could have lost more than $ 4 billion through the alleged cryptocurrency, which promised investors quick riches. Where the money has remained is currently unknown.

The main offender is the Bulgarian Ruja Ignatova. In London and elsewhere, she promoted Onecoin as an elegant inventor and made great promises to investors. Onecoin was touted as a "Bitcoin killer". Media gave her the title of "crypto-queen". She allegedly brought hundreds of thousands of people for her money.

Entrepreneur with mafia relationships

Her brother, Konstantin Ignatov, has according to the investigative site Inner City Press at least confessed to American FBI investigators and admitted several offenses in New York, including money laundering and fraud. Many investors are coming from the UK. The BBC has released a major podcast series about the machinations of the alleged cryptocoin inventor, who also allegedly has connections to the Bulgarian mafia.

Despite all this, there is still a website on which Onecoin stirs the advertising drum. It is advertised with slogans like: "Be part of the financial revolution." and Onecoin is "the first transparent, global cryptocurrency for everyone". The advertised digital money promised high returns for investors. It also announced that millions of people in underdeveloped countries in Africa and Asia will have access to financial services.

Onecoin is a pyramid system

Onecoin was and still is not a cryptocurrency, based on the blockchain technology, but a rather simple pyramid scheme: The first investors could make high profits, as more and more investors put money in the system, but in the end are high losses. Although Onecoin denies any illegal activity on the site, such methods are fraudulent.

In 2017, Onecoin is said to have raised more than $ 4 billion from investors worldwide, including some £ 100 million from British citizens. In October 2017 Ruja Ignatova disappeared suddenly, since then she is wanted by the FBI.

Onecoin in the BBC news:

• OneCoin lawyer on trial for role in 'crypto-scam' - BBC News
• Cryptoqueen' brother admits role in OneCoin fraud - BBC News

Is somebody available, who can explain me the advantages of cryptocurrencies?

If I'm using inside the European Union a normal bank transfer, the transfer is free of charge and the receiver see it the next banking day on his account. If I'm transferring money from one bank account inside the European Union then I need to pay a transfer fee of € 7 and up to an transferred amount of € 1.500 € 4 (in total € 11). If I'm transferring more than € 1500 than for the amount above € 1500 will get added around 2‰ on fees.

On the other hand if I'm transferring Bitcoins I have to pay fees:

• If I'm transferring bitcoins from the left hand wallet to the right hand wallet
• If I'm buying Bitcoins
• If I'm selling Bitcoins

Why shall I use in this case Bitcoins if I'm even not able to transfer them from one wallet to another one without fees?

Please tell me, where is the mistake or my thinking error and where are really the advantages from cryptocurrencies.

The Bitcoin has a dubious reputation. And rightly so, as a study shows: According to this, not only the currency itself, but also the bulk of the stock market transactions with it are virtual. The curious thing: Originally, the client of the study wanted to bring out an ETF (Exchange Traded Fund) on Bitcoin.

One already guessed it, now shows an opinion: Irregularities are in the Bitcoin business no exception, but rather the rule. This is the case in particular with regard to the turnover at various swap exchanges: Most of them are fictitious transactions. A whopping 95 percent of all trading volumes on Bitcoin exchanges are pure bluff!

Bitwise wants to launch an ETF on Bitcoin. So far, the US Securities and Exchange Commission had always rejected such plans. Standard argument: crypto exchange places are contrary to official stock exchanges not regulated markets, which are opening doors and gates for manipulations. The request of Bitwise was also rejected in the meantime, despite the report - or perhaps because of it.

Also, the crypto-currency-focused asset manager Bitwise is noteworthy. Because the company chose a risky and clever strategy to obtain the approval of a Bitcoin ETF from the US Securities and Exchange Commission.

Curiously, Bitwise has prepared the report to prove the integrity of Bitcoin. This has been at least partially successful: The asset managers were able to prove the report (more than 200 pages) that Bitcoin are traded on the ten major core exchanges without fictitious transactions. Nevertheless, the result is devastating: Instead of the trading volume reported by various Bitcoin brokers of a daily volume of 11 billion US dollars during April, the transactions made according to the Bitwise study, only 554 million US dollars.

The SEC superiors say that groups or individuals who have huge amounts of bitcoins could manipulate the market even if prices were calculated only from the average of the ten "clean" exchanges. In a concerted action, they could succeed in attacking and manipulating several exchanges simultaneously. Another objection: even though, as stated by Bitwise, there are stock exchanges that function properly, the other hubs could still influence Bitcoin prices on these reputable exchanges. Bitwise failed to demonstrate that the ten stock exchanges identified as being efficient are shielded by the others in some way.

The SEC rejection for the request was given on more than 100 pages: Self-Regulatory Organizations; NYSE Arca, Inc.; Order Disapproving a Proposed Rule Change, as Modified by Amendment No. 1, Relating to the Listing and Trading of Shares of the Bitwise Bitcoin ETF Trust Under NYSE Arca Rule 8.201-E

Bitcoin dominates the market. BTC's market capitalization now accounts for almost 70% of the total exchange-traded cryptocurrency. But when trading cryptos on exchanges, there is an exception: some days, more Tethers (USDT) are traded than Bitcoins. Especially if the prices of Bitcoin and others grow strongly or fall sharply, then traders resort to Tether.

What is Tether?

Tether was originally born in 2014 under the name "Realcoin" by a startup of founders Brock Pierce, Reeve Collins and Craig Sellars in Santa Monica. Soon, "Realcoin" was renamed to Tether and got the abbreviation USDT, under which Tether is traded on crypto exchanges. The basic idea is that Tether should be a stablecoin that is not subject to the volatility of other cryptocurrencies and is pegged to the US dollar.

What is Tether used for?

Answered by Alexander Valtingojer from Coinpanion:

Tether allows the quick exchange of a crypto-asset (eg Bitcoin, Ether etc.) into a traditional asset (i.e. US-Dollar, Euro etc.), without having to leave the crypto-exchange. A stablecoin is a crypto-derivative: the representation of an underlying in the form of a token.

Tether is used primarily in the trading space to capture price gains from volatile cryptocurrencies in less volatile assets

The intense use of USDT can be seen whenever Bitcoin's prices suddenly start to rise or fall rapidly. As prices rise, investors USDT in BTC, ETH or other crypto assets to quickly participate in the price gains. when prices fall again, they switch back to USDT.

How does Tether work technically?

According to the company behind Tether, USDT tokens are used on the Bitcoin blockchain via the Omni Layer Protocol, on the Ethereum Blockchain as the ERC20 token, and on the TRON Blockchain as the TRC20 token.

Tether tokens can not get mined, but are issued by the company behind them using their own Smart Contract" says Valtingojer. "Originally, Tether tokens were operated via the Omni Layer Protocol. Now these are being generated by the Ethereum and more recently the TRON blockchain.

Who is behind Tether?

The corporate networks behind the Stablecoin are very controversial. The issuing company of Tether is Tether Limited, itself a wholly owned subsidiary of Tether Holdings Limited, which is based in Hong Kong. The CEO is Jan Ludovicus van der Velde.

But there are also links with the company iFinex, which in turn operates the crypto exchange Bitfinex. This was the first to trade in Tethers. Jan Ludovicus van der Velde is also the CEO of Bitfinex. Tether also borrowed money from Bitfinex. The New York Prosecutor General's Office opened an investigation against the companies in April 2019.

Statement from attorney General Letitia James:

Our investigation has revealed that the Bitfinex trading platform operators, who also control the Tether virtual currency, have engaged in a cover-up to obfuscate the $ 850 million apparent loss.

Who holds Tether?

Around 80 percent of all Tether tokens are in possession of about 300 addresses. This has resulted in an analysis by Coin Metrics.

Valtingojer of Coinpanion:

However, this is not uncommon since Tethers are mainly used on centralized crypto exchanges, e.g. Binance is used. There, as a user, you do not have your own wallet and the ownership of the tokens is managed off-chain from the crypto exchanges.

The centralization of Tether is still seen as critical because of the danger that, with the help of USDT, the prices of cryptocurrencies could be controlled under the control of a few investors. For example, a study by scientists at the University of Texas at Austin concluded that Bitcoin's flight from the end of 2017 was the result of a market manipulation that leveraged Tether to artificially pump up the market.

Is Tether really baked by dollars?

There are currently about $ 4 billion tokens in circulation, which can be bought at Tether or Exchanges for $ 1 each. That would mean that the companies behind it stored somewhere around $ 4 billion to cover the value of the virtual tokens. But that is not the case.

Every Tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.

In April 2019, for example, the companies behind Tether indicated that the coin was only 74 percent covered by dollars in the reserve.

Is Tether really a stablecoin?

Answer from crypto expert Valtingojer:

The name stablecoin results above all from the possibility of exchanging the tokens equivalently for US dollars at any time. Due to short-term increased trading activity and resulting increased trading volumes, there may be divergences between supply and demand, which is why then tokens are exchanged for more or less than one US dollar. In the end, the Tether market is also part of a stock exchange, which is why the price is determined by supply and demand. For example, negative news can lead to increased sales and thus lower the price.

For providers of Bitcoin papers the stock exchange door remains closed - at least in the USA. The supervisor has again rejected applications for Bitcoin ETFs. This is not surprising, said Mati Greenspan, senior market analyst at trading platform eToro.

Bitcoin index funds? Not with us, the stock market watchers say by the US Securities and Exchange Commission. They have again rejected applications for ETFs on the cryptocurrency - this time nine at once. "In the run-up to the decisions, only a few expected the success of their applications anyway" said Mati Greenspan.

At the time of the announcement, Bitcoin's price was stable. The interim high of 6,873 US dollars, he reached a few hours before the announcement, the crash took place in advance. A decision by the SEC is still pending: VanEck has submitted a draft for a Bitcoin index fund, which should be directed to institutional investors. The deadline for the decision is September 20. "The SEC could postpone the decision until March", said Greenspan.

Basically, the relaxation of the Bitcoin course contributed to the development of the network in recent weeks, the eToro analyst: "In addition, the Bitcoin network now scales better." In November and December, Bitcoin struggled with heavy trade, and Miner could not confirm the high number of transactions fast enough. "However, the problems have subsided since the beginning of the year and more or less completely resolved since February," said Greenspan. In addition, the Bitcoin network is preparing for the simultaneous processing of higher transaction volumes.