Thirty-five individuals were convicted and sentenced in Zhuzhou City People's Court on September 8th for their involvement in promoting the OneCoin cryptocurrency scheme. Sentences for the Chinese affiliates ranged from probation to several years in prison, alongside fines up to 5 million yuan.
This recent crackdown follows earlier arrests in Guangdong province. There, authorities apprehended three senior Chinese OneCoin promoters, leading to the recovery of 45.7 million USD in illicit funds. These prior actions set a precedent for the broader enforcement against the scheme.
The Zhuzhou City investigation in Hunan province targeted a larger network. Prosecutors accused the thirty-five individuals of soliciting investments into OneCoin, which authorities worldwide identify as an illegal Ponzi scheme. Chinese regulators have long warned against such operations, deeming them financially unstable and fraudulent.
During the trial, the Zhuzhou City People's Court determined OneCoin operated from Bulgaria. Its business model, the court concluded, functioned as a pyramid scheme. Participants paid a fee to join, expecting returns on their direct and indirect recruitment activities. These purported returns, often presented as high-yield installments, served as bait for new investors.
The court explicitly rejected OneCoin's claim as a legitimate currency, whether virtual or otherwise. Its ruling stated OneCoin "is not issued by Chinese monetary authorities, has no legal status in China and can and should not be used as a currency within China." This legal stance aligns with China's broader regulatory framework prohibiting unofficial digital assets.
Authorities presented evidence showing the thirty-five affiliates individually defrauded victims of amounts ranging from 10,000 to 20 million yuan, equivalent to approximately 1,546 to 3 million USD. Of the total stolen, investigators managed to seize and recover 13.6 million yuan, or about 2.1 million USD, from the defendants' assets.
All thirty-five defendants faced conviction at the Zhuzhou City People's Court. Sentences varied, with some receiving probation and others serving multiple years in prison. Fines imposed by the court ranged from 10,000 yuan to 5 million yuan, converting to roughly 1,546 USD to 773,455 USD per individual.
This enforcement action against OneCoin coincided with a significant regulatory move in China. On Monday, Chinese authorities banned Initial Coin Offerings (ICOs) outright. They mandated that companies soliciting ICO investments from Chinese citizens must provide full refunds. This blanket prohibition solidified the government's strict control over the digital asset market.
OneCoin had actively sought investors in China since late 2014, consistently promising its eventual public listing. The recent ICO ban and refund directive place OneCoin in a difficult position regarding its Chinese affiliates. The company has not yet commented on whether it will comply with the new refund requirements for its investors within China.
The seized assets and convictions in Zhuzhou City serve as a stark warning to those promoting similar schemes within China, where financial crime carries severe penalties.