The top leaders of OneCoin, an alleged educational package cryptocurrency trading company, have been charged by prosecutors in New York’s Southern District (NYSD) with money laundering, wire fraud, and securities fraud.
The press release from the Department of Justice in the NYSD details how Konstantin Ignatov, Ruja Ignatova, and Mark Scott are complicit in an international marketing pyramid scheme for the OneCoin cryptocurrency project. According to Manhattan U.S. Attorney, Geoffrey S Berman, the release states:
“As alleged, these defendants created a multibillion-dollar ‘cryptocurrency’ company based completely on lies and deceit. They promised big returns and minimal risk, but, as alleged, this business was a pyramid scheme based on smoke and mirrors more than zeroes and ones.”
A Worldwide Pyramid Scheme
The investigation centered on the OneCoin business model, which was designed as a pyramid scheme. OneCoin members would receive a commission for recruiting new members to buy the educational packages and were encouraged to push more recruitment and sales in order to earn passive income through OneCoin. The growth OneCoin experienced was rapid and devastating.
“This multi-level marketing structure appears to have influenced rapid growth of the OneCoin member network. Indeed, OneCoin Ltd. has claimed to have more than 3 million members worldwide, including victims living and/or working within the Southern District of New York. OneCoin continues to operate to this day,” the press release details.
OneCoin is based in Sofia, Bulgaria and deceived investors by maintaining that it had a functioning blockchain product and mining operation, when in fact, it had neither. The investigation highlighted how OneCoin raked in €2.232 billion in profits between Q4 2014 and Q3 2016 alone.
Moreover, the investigation has revealed that Ruja Ignatova and her co-founder conceived of and built the OneCoin business fully intending to use it to defraud investors,” cites the press release. Ignatov was recently arrested at LAX on March 6th, and Scott was apprehended in September 2018.
The perpetrators were not very subtle with their initiative to defraud investors either, the press release continues:
“For example, in one email between Ignatova and her co-founder, Ignatova described her thoughts on the ‘exit strategy’ for OneCoin. The first option that Ignatova listed was, ‘Take the money and run and blame someone else for this . . . .’”
Notably, China prosecuted 98 people in May 2018 involved with the OneCoin pyramid scheme as the NYSD was building their case against the operation’s leaders. China’s move followed numerous investigations and fines targeting OneCoin.