The United States authorities have arrested Konstantin Ignatov- the executive of OneCoin for a multi-dollar international fraud. On the whole, three people- Konstantin Ignatov, Mark Scott and Ruja Ignatova, have been indicted. Three million investors got the brunt. The scam exceeds 3.8 Billion U.S. Dollars and has been on since 2014.
Ignatov got arrested on 6th March at the Los Angeles International Airport on the basis of operating- ‘OneCoin’ which is a fake cryptocurrency. If the charges will be proved, a twenty years imprisonment awaits him. The ex-partner of one of a famous U.S law firm- Mark Scott was also arrested on 5th March on the charges of money laundering. Scott is also in for a twenty years imprisonment if the charges will be proved. The third person, against whom an indictment has been unsealed by the Southern District of New York Geoffrey Berman, is Ignatov’s sister- Ruja Ignatova, who is currently hiding. The indictment was passed on 7th March on the basis of wire fraud, securities fraud, and conspiracy to commit money laundering, as per reports obtained from techspot.com. If these charges are proved, each charge will lead her to face 20-years imprisonment. Additionally the securities fraud charge might add up another five years.
Manhattan U.S. Attorney Geoffrey S. Berman said-
“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. Investors were victimized while the defendants got rich. Our Office has a history of successfully targeting, arresting, and convicting financial fraudsters, and this case is no different.”
Ruja was the co-founder of OneCoin Ltd in 2014, which was headquartered in Sofia, Bulgaria until October 2017. In 2017 she disappeared from the face of this situation, and her brother soon took over in mid-2018.
The company business model was the multi-level marketing scheme. For selling the OneCoin investment packages, the members would get commissions. In the period of two years from 2014- 2016, the company managed to raise €3.353 billion ($3.8 billion) in revenues and made around €2.2 billion ($2.5 billion) in profit. As per DoJ, the company has three million members. The investigators found out that the company’s private blockchain claim is a lie, and the coins that it has been offering since 2015 are fake.
“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. Investors were victimized while the defendants got rich.”
An excerpt from the press release states-
“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 . . . .”
In a meeting with the OneCoin members in Las Vegas earlier in March, upon asking about how the members can monetize their investments, for which Konstantin Ignatov said-
“If you are here to cash out, leave this room now because you do not understand what this project is about.”
William Sweeney, Jr., Federal Bureau of Investigation Assistant Director-in-Charge warned the investors that-
“As we allege, OneCoin was a cryptocurrency existing only in the minds of its creators and their co-conspirators. Unlike authentic cryptocurrencies, which maintain records of their investors’ transaction history, OneCoin had no real value. It offered investors no method of tracing their money, and it could not be used to purchase anything. In fact, the only ones who stood to benefit from its existence were its founders and co-conspirators. Whether you’re dealing with virtual currency or cold, hard cash, we urge the public to exercise due diligence with any investment.”
In a press release, the US Department of Justice has made a public announcement requesting people to come up with any kind of information of fraud experience that involves OneCoin, in order to shed more light on the case. You can contact the United States Attorney’s Office at 866-874-8900, or by sending an email at [email protected]