By Ted Nuyten
The BAFIN in Germany regulates financial transactions and according to a German press release, Bafin ordered InternationaI Marketing Services – a OneCoin company – to freeze and cease its operations in Germany as the company did not and does not have the required authorization for finincial transactions.
The order may still be subject to judicial review.
BaFin is one of the largest financial supervisory authorities in Europe. With its more than 2,600 employees, BaFin takes an industry-appropriate and risk-oriented approach to supervision on the basis of recognised European supervisory standards.
As an integrated financial supervisor for the banking, securities and insurance sectors, BaFin ensures the stability of the largest financial market in continental Europe.
BAFIN did not judge the Direct Sales compensation plan:
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.
According to BAFIN:
On 17 and 20 February 2017, the German Federal Financial Services Supervisory Authority (BaFin) imposed an account freeze on IMS International Marketing Services GmbH, a German limited liability company.
The administrative action is by law immediately enforceable; it is based on § 4 (1) sentence 4 of the German Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz – ZAG).
In its decree of 5 April 2017, BaFin ordered IMS International Marketing Services GmbH to immediately cease and wind down its unauthorized money remittance business with investors in “OneCoin” for Onecoin Ltd, Dubai; that decree is based on § 4 (1) sentence 1 ZAG.
In case IMS should not abide by the order to cease business, BaFin threatened to impose a fine of 1,5 million euros; for non-compliance with the winding-down order, it would impose a fine of 150,000 euros. By law, the administrative acts, including the threats of fines, are immediately enforceable.
BaFin ordered IMS International Marketing Services GmbH to transfer the remaining bank deposits back to the investors who had made payments to IMS International Marketing Services GmbH most recently, where the bank deposits are not subject to a garnishment.
Onecoin Ltd, Dubai is part of a network of companies that market virtual units, which they declare to be a cryptocurrency, under the “OneCoin” brand using a multi-level marketing structure both globally and in Germany.
On behalf of Onecoin Ltd, IMS International Marketing Services GmbH had investors who had bidden to buy “OneCoins” transfer the sales price to various accounts held by IMS International Marketing Services GmbH with different banks in Germany and forwarded the money on behalf of Onecoin Ltd to third parties, based in particular outside of Germany.
This kind of financial service is classified as money remittance business as defined in § 1 (2) no. 6 ZAG, which, as a payment service, requires prior authorization by BaFin in accordance with § 8 (1) sentence 1 ZAG. IMS International Marketing Services GmbH did not and does not have the required authorization.
Between December 2015 and December 2016, IMS International Marketing Services GmbH took in, in total, approximately 360 million euros on behalf of Onecoin Ltd. Approximately 29 million euros of this remains in the currently frozen accounts.