Germany's top finance regulator has moved to shut down a payment processor tied to to the OneCoin cryptocurrency scheme, a digital currency service that has faced widespread allegations of fraud.
The Federal Financial Supervisory Authority (BaFin) said on 10th April that it was freezing the accounts of IMS International Marketing Services GmbH, which is registered in Germany.
According to BaFin, the firm accepted €360m on behalf of OneCoin between December 2015 and December 2016. Of that amount, €29m is being held in the accounts frozen by the regulator.
The agency went on to threaten financial penalties in excess of €1m, going on to say:
"In case IMS should not abide by the order to cease business, BaFin threatened to impose a coercive fine of €1.5m; for non-compliance with the winding-down order, it would impose a coercive fine of €150,000. By law, the administrative acts, including the threats of coercive fines, are immediately enforceable."
With the move, BaFin becomes the latest regulator in Europe to take action against elements of the OneCoin scheme.
OneCoin is a multi-level marketing scheme that pitches an eponymous digital currency as an investment opportunity. Prospective buyers purchase batches of tokens which can then be redeemed online, though those involved are strongly encouraged to find buyers of their own – a characteristic that lends itself to accusations that OneCoin is a pyramid scheme.
In the past year, regulators in several African countries have warned consumers about local efforts by OneCoin to solicit investors. In the UK, London police have been investigating OneCoin since as early as September, while in Italy, regulators moved last month to prohibit promotional efforts for OneCoin by local proponents.
Notably, BaFin made it clear in a statement that it was moving against the firm due to unlicensed money activities rather than the legality of sales of OneCoin tokens.
"BaFin does not have the right to decide as to the validity under civil law of the 'OneCoins' sales contracts. It may therefore not answer questions of this nature," the agency said.
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