Founder of Multi Billion Dollar Pyramid Scheme OneCoin Arrested
Authorities announced on Friday the arrest of one of the founders of the Bulgarian cryptocurrency business OneCoin, saying it was nothing more than a pyramid scheme designed to scam users out of their money. While crypto scams are
disturbingly common, according to the US Department of Justice, prosecutors allege that this particular fraud ran into the billions.
OneCoin chief Konstantin Ignatov faces a charge of conspiracy to commit wire fraud, which could carry a maximum sentence of 20 years in prison, while his older sister Ruja Ignatova is at large and faces several charges, including wire and securities fraud and money laundering. If convicted, those charges could land her up to 85 years in prison. A third defendant, Mark Scott, stands accused of helping the two launder more than $400 million in illicit proceeds.
The DOJ stated that OneCoin operates in a way that a classic pyramid scheme would, offering users rewards for inviting new members.
OneCoin Ltd. operates as a multi-level marketing network through which members receive commissions for recruiting others to purchase cryptocurrency packages. 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.
OneCoin has been running for quite a while. I first came across it in 2014 on some forums. I took a brief look into it and quickly realised that it smelled fishy so I stopped paying attention to it. They built up quite the rewards system for their users. Invite more people and get crazy rewards. It only grabbed my attention after an acquaintance messaged me directly on social media, claiming that one of my friends, Asse Sauga, had just invested 20 000 euros into OneCoin. Asse at the time was a cryptocurrency expert in LHV, an Estonian bank and a fellow board member in The Estonian Cryptocurrency Association.
Conveniently, we were at the board meeting of the association at the time I received the message. Asse of course had no idea about OneCoin and had not invested anything in it. We started digging deeper into what OneCoin was. We felt it was our responsibility to get to the bottom of this as OneCoin seemed to have a huge following in Estonia. If indeed a scam, we had to warn people.
The Exclusive Interview with Ruja Ignatova
We contacted Ruja Ignatova, the alleged crypto queen, and got the first and last interview ever with her on the topic . Her answers were more than concerning. Later on I watched various videos from their events that featured larger than life promises of making everyone a millionaire overnight. More similar to somewhat of a cult rather than a cryptocurrency. Pyramid schemes work very well with large audiences, generally a bit gullible, wanting to turn their life around and reach financial freedom.
Ruja Ignatova even admitted to OneCoin being a MLM scheme in the above mentioned interview: Regarding the MLM system, as I understand, the main product what you are actually selling is the educational materials?
The DOJ further claimed, Ignatova described a possible exit strategy, in one of the emails they discovered: “Take the money and run and blame someone else for this.”
While Konstantin Ignatov was detained at Los Angeles International Airport, Ruja Ignatova has yet to be found. Authorities in at least 16 countries have advised potential investors to be wary of OneCoin since at least 2016, according to industry publication CoinDesk . Members of the pyramid scheme have been arrested and/or charged in China and India , while financial regulators have gone after its payment processors and trading network . We all remember the nonsense called Bitconnect don’t we? OneCoin was one of its predecessors. I’ve always wondered - if you are able to market something so well and build a large following, why not spend your time on something useful?