As per The Block’s recent reports, OneCoin summons includes security fraud allegations. The report is posted by Stephen Palley and Nelson Rosario wherein they disclosed that organizers of OneCoin, Ignatova and Ignatov, have been accused of wire fraud, securities fraud, and plotting to execute money laundering as well.
It has always been tough to follow how the illicit crypto and ICO projects would be dealt with by the DOJ of the United States. There is a lack of clear rules when it comes to ICOs as well as other crypto-related activities, even though the United States’ SEC (Securities and Exchange Commission) regards ICO as an unregistered security.
The Block also states that prosecutions with respect to such plans have been rare, there are some exceptions though. For instance, United States v Homero Joshua Garza which has been directing a mining con scheme linked to bitcoin.
DOJ’s been silent when the digital currencies were going through their bull market phase back in 2017. And whenever it did get involved, the entity had a very restricted influence. However, with OneCoin charges, things seem to have changed.
OneCoin came into existance around 2014 post the boom of alternative coins where multiple cryptocurrencies made their debut and contributed to the market. Reports suggest that it was founded by Ruja Ignatova, said to be a citizen of Bulgaria. However, doubts clouded around as there was an absence of the MLM compensation plan and blockchain.
DOJ notes this specific scheme as massive because it has involved a huge sum of 3 billion dollars. The Block analysts state that this summons could offer important information with regards to the future expectations people can have from ICOs and prosecutors.
In September 2018, the attorney of this scheme was charged with the conspiracy of committing money laundering. In fact, the organizers of the plan include the number of scheme to carry out the fraud. Hence, DOJ believes it can convince judges that ICO tokens are securities by administering Howey test.
Revealing further information, the bulletin read, “If the indictment’s allegations are proven to be true, it would mean that OneCoin is among one of the more outrageous, flagrant, and long-running alleged scams in the cryptocurrency business, and only now have the wheels of justice ground their way to an indictment.”
Looking at it whole, we can say that the crypto world has never been free from fraudulent incidents or scams, especially since the last couple of years during the phase of the booming market. The DOJ now appears to be making efforts to clear its stance about ICOs along with a way of dealing with it.