Bitcoin alternative in 'pyramid scheme' storm

The founders of a new digital currency, known as LEOCoin, have hit back at reports published over the weekend linking them with a suspected pyramid scheme back in 2012.

Last week, U.K.-based Learning Enterprises Organisation (LEO) unveiled a trading platform in Hong Kong for its cryptocurrency called LEOCoin, which the company is promoting as an alternative to more popular digital currencies like bitcoin.

At a London launch the previous week, LEO boasted that it had already promoted the product to its current client base, claiming it meant over 100,000 entrepreneurs were already actively using the cryptocurrency in anticipation of its official trading debut, with around 30,000 merchants already signed up.

It also claimed this made it the "second largest digital currency" in the world, second to bitcoin, but has been slammed by reports on industry websites in the last week. Joel Dalais, a virtual currency entrepreneur and the director of bitcoin exchange IBWT, said on cryptocoinsnews.com that LEOCoin was a "good example of what a pump and dump coin looks like." He also dismissed its claims of its sizeable usage as "bulls*t."

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An article by another industry website, called CoinDesk, delved into the history of project founders Dan Anderson and Atif Kamran and said that both were caught up in a controversy surrounding a suspected pyramid scheme, called UNAICO Pakistan, that was warned by the Securities & Exchange Commission of Pakistan in 2012.

Published online, the report by the Pakistani SEC said it had received various complaints from the public claiming that UNAICO was a pyramid scheme. The letter, dated April 2012, concludes that the company's activities did "broadly fall" within the definition of "fraudulent activities" and gave a recommendation to shut down the firm.

LEO's Dan Anderson is named as being the CEO of UNAICO at the time and Atif Kamran was also linked to the company through Sitetalk, a social community platform that is described as a "sister concern" by the Pakistani commission.

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Bitcoin alternative in 'pyramid scheme' storm