OneCoin logo on the door of their office building in Sofia, Bulgaria, in 2016

OneCoin is a fraudulent cryptocurrency scheme[1][2] conducted by offshore companies OneCoin Ltd, based in Bulgaria and[3] registered in Dubai, and OneLife Network Ltd (registered in Belize), both founded by Ruja Ignatova in concert with Sebastian Greenwood.[4] OneCoin is considered a Ponzi scheme due to its organisational structure of paying early investors using money obtained from newer ones. It was also a pyramid scheme due to the recruiting of investors without providing any actual product.[5] The company secretly conducted database entry scam simulating transactions not registered by an actual blockchain, and with no mining behind the apparent cryptocurrency release and circulation. Many of those characters central to OneCoin had been previously involved in similar and different other schemes and business malpractices separate from each other.[6] OneCoin was described by The Times as "one of the biggest scams in history".[7]

US prosecutors have alleged the scheme brought in approximately $4 billion worldwide.[8] In China, law enforcement recovered 1.7 billion yuan (US$267.5 million) while prosecuting 98 people.[9] Ignatova disappeared in 2017 near the time a secret US warrant was filed for her arrest and her brother, Konstantin Ignatov, took her position. Most of the leaders have now disappeared or been arrested, though Ignatova has escaped arrest.[10] Greenwood was arrested in 2018,[11] as was Konstantin Ignatov in March 2019.[12] In November 2019, Ignatov pleaded guilty to charges of money laundering and fraud. The total maximum sentence for the charges is 90 years in prison.[13] In 2022 Greenwood pleaded guilty, and in 2023 was sentenced to 20 years for wire fraud and money laundering.[14]

Concept

OneCoin was launched in late 2014. It was not a decentralized cryptocurrency but rather a centralized pyramid scheme hosted on OneCoin Ltd's servers which was marketed as a cryptocurrency. The scheme was set up by Ruja Ignatova with Sebastian Greenwood acting as the lead distributor in the pyramid.[15]

According to OneCoin, its main business was selling educational material for cryptocurrency trading: investors could buy "educational packages" costing anywhere from 100 euros to 118,000 euros,[16] or—according to one industry blog—225,500 euros.[17] According to a suit filed by former investors, much of the content in those packages was plagiarized from various free sources, including Wikipedia.[18] Investors also received "tokens" that could be assigned to mine OneCoins.[19] Mining was said to be taking place at two sites in Bulgaria and one in Hong Kong.[20]

In typical OneCoin recruiting meetings, recruiters would focus on cryptocurrency investment, and the "educational material" was barely mentioned.[21][22]

The only way to exchange OneCoins for other currencies was the OneCoin Exchange ("xcoinx"), an internal marketplace for members who had invested more than a set amount. OneCoins could be exchanged for euros, which were placed in a "virtual wallet", from which they could request a wire transfer. The marketplace had daily selling limits based on which package the seller had invested in, greatly limiting the amount of OneCoins which could be exchanged by the scam's victims. As lead distributor, 5% of all OneCoin sales went to Greenwood, who made over US$300 million.[15]

On 1 March 2016, without notice, OneCoin issued an internal notice that the marketplace would be closed for two weeks for maintenance, explaining that this was necessary due to the "high number of miners" and for "better integration with blockchain".[23] On 15 March 2016, the market re-opened. It was shut down again without notice in January 2017, though individuals affiliated with the company continued to accept funds.[24][10]

2015

On 30 September 2015, Bulgaria's Financial Supervision Commission (FSC) issued a warning of potential risks in new cryptocurrencies, citing OneCoin as an example.[25] After the warning, OneCoin ceased all activity in Bulgaria and started to use banks in foreign countries to handle wire transfers from participants.[26]

2016

In February 2016, the British newspaper Daily Mirror wrote that OneCoin / OneLife is a get-rich-quick scheme scam and a cult, calling it "virtually worthless".[27]

Ruja Ignatova, CEO of OneCoin

The company and the scheme is on the observation lists of many authorities; among them are authorities in Bulgaria, Finland,[16][28][29] Sweden,[30] Norway[31] and Latvia.[32] Authorities in many countries have warned of potential risks involved in businesses like OneCoin and undertaken prosecutions against persons linked to OneCoin, including CEO Ruja Ignatova and her brother Konstantin Ignatov.[12]

In March 2016, the Direct Selling Association in Norway warned against OneCoin, comparing it to a pyramid scheme.[4]

In December 2016, the Italian Antitrust Authority (Autorità Garante della Concorrenza e del Mercato) "adopted an interim injunction against the company One Network Services Ltd., active in the promotion and dissemination of cryptocurrency OneCoin", and its representatives in Italy, describing their activities as an "illegal pyramid sales system" ("sistema di vendita piramidale vietato dalla legge"), and ordering them to cease promoting and selling OneCoin in Italy[33] On 27 February 2017, after concluding their investigation, AGCM banned all activity on OneCoin until further notice.[34]

In December 2016, the Hungarian Central Bank issued a warning that OneCoin is a pyramid scheme,[35] and in China that same year several members and investors of OneCoin were arrested and US$30.8 million worth of assets seized.[36]

2017

In March 2017, the Croatian National Bank (HNB) advised the public to "exercise a high degree of caution" in decisions involving OneCoin, noted that OneCoin operations are not supervised by the HNB, and warned that possible losses will be fully borne by the investors.[37]

On 23 April 2017, Indian police arrested 18 people in Navi Mumbai for organizing a OneCoin recruitment event. The police attended the event undercover to judge the accusations before they decided to act. Further investigation was begun with the intent of revealing the higher levels of the pyramid.[38][39] In May, the investigation recovered Rs 24.57 crores ($3.32 million USD) in nine bank accounts. A further Rs 75 crores ($10.12 million USD) were transferred out before authorities were able to seize it.[40] Early in the month of May, two more people were arrested and a further Rs 24 crores ($3.24 million USD) were seized from bank accounts. A special investigation team of 15 individuals including 4 assistant police inspectors was formed under Senior Police Inspector Shivaji Awate with the stated goal of following the money trail and possibly lead to further arrests.[41]

On 27 April 2017, Germany's Federal Financial Supervisory Authority (BaFin) issued cease and desist orders to Onecoin Ltd, Dubai, and OneLife Network Ltd, Belize.[42] The Authority concluded that trading in OneCoins was fraudulent "own funds" trading.[42]

On 28 April 2017, Bank of Thailand issued a warning against OneCoin, stating it was an illegal digital currency and that it should not be used in trade.[43]

On 29 May 2017, International Financial Services Commission of Belize (IFSC) issued a warning about OneLife Network Ltd conducting trading business without license or permission from IFSC or any other authority. OneLife Network Ltd was directed to cease and desist from carrying on with the illegal trading business.[44]

On 16 June 2017, the CEO of OneCoin Ltd. claimed OneCoin was licensed by the Vietnamese government, that it was legally permissible to use them as a digital currency and that it was the first cryptocurrency in Asia officially licensed by any government.[45] On 20 June 2017, Vietnam's Ministry of Planning and Investment (MPI) issued a statement that the document which OneCoin used as proof was forged. They stated that the document was against the MPI regulations and that the person who supposedly signed the document was not in the position claimed by the document at the time when the document was created. MPI warned individuals and enterprises to be vigilant if they encounter the document during business.[46][45]

On 10 July 2017, Ruja Ignatova, the CEO, was charged in India with duping investors as a part of the Indian investigation.[6]

2018

The office of OneCoin in Sofia, Bulgaria, in 2016

On 17 and 18 January 2018, Bulgarian police raided OneCoin's office in Sofia at the request of the prosecutor's office in Bielefeld, Germany. German police and Europol took part in the bust and the investigation. Also 14 other companies, tied to OneCoin, were investigated and 50 witnesses were questioned. OneCoin's servers and other material evidence were seized.[47]

On 3 May 2018, the Central Bank of Samoa (CBS) banned all foreign exchange transactions related to OneCoin and OneLife.[48] The bank had earlier in March issued a warning about OneCoin.[49] CBS describes OneCoin as a very-high-risk pyramid scheme.

Ruja Ignatova's collaborator and OneCoin's co-founder Sebastian Karl Greenwood (age 46–47) was arrested in Thailand in July 2018. He was imprisoned in Thailand pending extradition to the United States. Greenwood is a father of four and a citizen of Sweden and the UK.[14][50][11] Greenwood used money from Onecoin to buy international real estate, expensive clothing and watches, and to make a SKr 6,500,000 down-payment on a Sunseeker yacht.[50]

2019

Ruja Ignatova's brother Konstantin Ignatov was arrested in March 2019.[12] In a plea deal made on 4 October (made public 12 November), he pleaded guilty to fraud and money laundering in connection with the scheme.[51]

On 21 November 2019 the New York Federal Court found lawyer Mark Scott guilty of money laundering and bank fraud for his role in routing US$400m out of the US.[52]

On 24 November 2019 the BBC published a detailed investigation of OneCoin and Ignatova titled "Cryptoqueen: How this woman scammed the world, then vanished". The reporters believe that Ignatova resides in Frankfurt under a false identity.[53]

2020

In 2020 the FinCEN Files showed that BNY Mellon flagged to FinCEN $137m of transactions related to OneCoin.

2021

The company OneCoin, Ruja Ignatova and Gilbert Armenta have been found in default at an ongoing trial in the US.[54]

2022

In May 2022, Europol added Ignatova to their "Europe's Most Wanted" list, offering a €5,000 reward for information leading to her arrest.[55][56] On June 30, the Federal Bureau of Investigation added Ignatova to the FBI Ten Most Wanted Fugitives list, offering a reward of up to $100,000 for information leading to her arrest.[57]

In December, Greenwood pleaded guilty to wire fraud and money laundering in the a US federal court.[14]

2023

In March 2023, OneCoin's former legal and compliance officer Irina Dilkinska was caught and extradited from Bulgaria to the United States.[58]

Frank Schneider, former intelligence officer of Luxembourg and advisor to Ignatova, has absconded.[59] Journalists speculate that Ignatova might have been murdered.[59]

In September 2023, Greenwood was sentenced to a 20-year federal prison term (minus 5-years already served) by a New York Federal court.[14][60][50]

See also

References

  1. ↑ Morris, David Z. (31 May 2017). "The Rise of Cryptocurrency Ponzi Schemes". The Atlantic. Archived from the original on 31 May 2017. Retrieved 5 June 2017.
  2. ↑ "Survey: Malaysians Warm Up to Cryptocurrencies". Nasdaq. 2 June 2017. Archived from the original on 2 June 2017. Retrieved 5 June 2017.
  3. ↑ "'Cryptoqueen' brother admits role in OneCoin fraud". BBC News. 14 November 2019. Archived from the original on 14 November 2019. Retrieved 19 November 2019.
  4. 1 2 "Vil ikke være politi". Direktesalgsforbundet Norge. 3 March 2016. Archived from the original on 8 March 2016. Retrieved 25 March 2016.
  5. ↑ Bartlett, Jamie (23 June 2022). The Missing Cryptoqueen. Ebury Publishing. ISBN 978-0-7535-5960-4. Archived from the original on 22 January 2023. Retrieved 6 December 2022.
  6. 1 2 Rao, Srinith (10 July 2017). "OneCoin fraud: Chargesheet says accused amassed Rs 75 crore". The Indian Express. Archived from the original on 5 July 2022. Retrieved 26 July 2022.
  7. ↑ Bartlett, Jamie (15 December 2019). "The £4bn OneCoin scam: how crypto-queen Dr Ruja Ignatova duped ordinary people out of billions — then went missing". The Times. Archived from the original on 15 December 2019. Retrieved 26 July 2022.
  8. ↑ Frankel, Alison (22 September 2021). "In $4 billion OneCoin fraud, jurisdiction dooms claims against ex-Big Law partner". Reuters. Archived from the original on 26 July 2022. Retrieved 26 July 2022.
  9. ↑ Yang, Yingzhi (29 May 2018). "China prosecutes 98 people, recovers US$268 million in OneCoin cryptocurrency investigation, report says". South China Morning Post. Archived from the original on 29 May 2018. Retrieved 29 May 2018.
  10. 1 2 Marson, James (27 August 2020). "OneCoin took in billions. Then its leader disappeared". Financial News. Archived from the original on 18 September 2020. Retrieved 27 August 2020.
  11. 1 2 Ngamkham, Wassayos (8 November 2018). "Cops take new tack as crime goes global". Bangkok Post. Archived from the original on 22 January 2023. Retrieved 12 March 2019.
  12. 1 2 3 "Manhattan U.S. Attorney Announces Charges Against Leaders Of "OneCoin," A Multibillion-Dollar Pyramid Scheme Involving The Sale Of A Fraudulent Cryptocurrency". Justice.gov. United States Department of Justice. 8 March 2019. Archived from the original on 8 March 2019. Retrieved 12 March 2019.
  13. ↑ "Cryptoqueen brother admits role in OneCoin fraud". BBC News. 14 November 2019. Archived from the original on 14 November 2019. Retrieved 19 November 2019.
  14. 1 2 3 4 Matza, Max (12 September 2023). "Cryptoqueen: Accomplice jailed for 20 years for OneCoin financial scam". BBC News. Retrieved 17 October 2023.
  15. 1 2 Breuninger, Kevin (12 September 2023). "Co-founder of $4 billion crypto fraud scheme gets 20 years in prison, 'Cryptoqueen' partner remains at large". CNBC. Retrieved 18 October 2023.
  16. 1 2 YLE (14 March 2016). "Finns investing millions in new virtual currency; police keeping tabs on case". Archived from the original on 14 March 2016. Retrieved 12 August 2016.
  17. ↑ "OneCoin investment packages approach a quarter million Euros". Behind MLM. 18 October 2016. Archived from the original on 26 September 2019. Retrieved 26 September 2019.
  18. ↑ Berdeaux v. Onecoin Ltd., vol. 561, 20 September 2021, p. 379, archived from the original on 26 July 2022, retrieved 26 July 2022
  19. ↑ Papadopoulos, Yiannis (24 December 2019). "Cryptoqueen disappears, leaving havoc in her wake". Kathimerini. Archived from the original on 3 July 2022. Retrieved 26 July 2022.
  20. ↑ "U.S. v. Konstantin Ignatov Complaint". United States District Attorney's Office Southern District of New York. 6 March 2019. Archived from the original on 12 April 2022. Retrieved 26 July 2022.
  21. ↑ "OneCoin valtaa Aasiaa" (in Finnish). 1 March 2016. Archived from the original on 17 November 2017. Retrieved 20 May 2016.
  22. ↑ Penman, Andrew (10 February 2016). "Here's why hyped-up web currency OneCoin is virtually worthless". mirror. Archived from the original on 14 January 2018. Retrieved 10 January 2018.
  23. ↑ "OneCoin - Uusi pyramidihuijaus? KRP: Rikosta voidaan arvioida luotettavasti vasta myöhemmin". 2 March 2016. Archived from the original on 23 April 2016. Retrieved 24 March 2016.
  24. ↑ "OneLife suspend OneCoin withdrawals, affiliates can't cash out". 15 January 2017. Archived from the original on 15 January 2017. Retrieved 26 April 2017.
  25. ↑ FSC (30 September 2015). "СЪОБЩЕНИЕ – OneCoin" (in Bulgarian). Archived from the original on 23 November 2015. Retrieved 12 August 2016.
  26. ↑ "OneCoin lose last bank account, unable to accept wires". behindmlm.com. Archived from the original on 16 November 2016. Retrieved 15 November 2016.
  27. ↑ Penman, Andrew (12 February 2016). "Who wants to be a OneCoin millionaire? YOU don't - here's why hyped-up web currency is virtually worthless". Daily Mirror. Archived from the original on 12 February 2016.
  28. ↑ Poliisi (11 April 2015). "KRP ON SELVITTÄNYT ONECOIN-VIRTUAALIRAHAA" (in Finnish). Archived from the original on 5 November 2015. Retrieved 12 August 2016.
  29. ↑ Helsingin Sanomat (4 November 2015). "Krp ei aloita tutkintaa Onecoin-valuutasta – kehottaa silti erityiseen varovaisuuteen" (in Finnish). Archived from the original on 4 November 2015. Retrieved 12 August 2016.
  30. ↑ Lotteri Inspektionen (27 January 2016). "OneCoins verksamhet polisanmält för misstänkt brott mot lotterilagen" (in Swedish). Archived from the original on 29 January 2016. Retrieved 12 August 2016.
  31. ↑ direktesalgsforbundet.no (3 March 2016). "Vil ikke være politi" (in Norwegian). Archived from the original on 8 March 2016. Retrieved 12 August 2016.
  32. ↑ "FKTK brīdina par OneCoin sniegtajiem pakalpojumiem" (in Latvian). 11 March 2016. Archived from the original on 16 March 2016. Retrieved 12 August 2016.
  33. ↑ "PS10550 – Vendite piramidali: sospesa in via cautelare la promozione della criptomoneta OneCoin". agcm.it. Archived from the original on 31 December 2016. Retrieved 30 December 2016.
  34. ↑ "PS10550 – Vendite piramidali: Antitrust sospende la promozione della criptomoneta OneCoin da parte di One Life". agcm.it. Archived from the original on 8 May 2017. Retrieved 12 March 2017.
  35. ↑ "Fokozott kockázatot hordoznak a világhálón elérhető virtuális fizetőeszközök (in Hungarian)". mnb.hu. Archived from the original on 22 December 2016. Retrieved 22 December 2016.
  36. ↑ behindmlm.com (27 April 2016). "Chinese authorities investigating OneCoin, investors arrested". Archived from the original on 29 April 2016. Retrieved 12 August 2016.
  37. ↑ "OneCoin product carries many risks". hnb.hr (Press release). Croatian National Bank. 7 March 2017. Archived from the original on 27 August 2017. Retrieved 25 September 2017.
  38. ↑ The Hindu (25 April 2017). "18 held for organising Ponzi scheme seminar". The Hindu. Archived from the original on 24 April 2017. Retrieved 25 April 2017.
  39. ↑ The Afternoon (25 April 2017). "Raid on OneCoin, brings out lakhs of coins". Archived from the original on 26 April 2017. Retrieved 27 April 2017.
  40. ↑ "OneCoin fraud: Cops recover Rs 24 crore from 9 banks". Times of India. 13 May 2017. Archived from the original on 13 May 2017. Retrieved 13 May 2017.
  41. ↑ The Hindu (18 May 2017). "2 more held in OneCoin scam". The Hindu. Archived from the original on 20 May 2017. Retrieved 19 May 2017.
  42. 1 2 "Onecoin Ltd (Dubai), OneLife Network Ltd (Belize) und One Network Services Ltd (Sofia/Bulgaria): BaFin issues cease and desist orders holding the companies to stop own funds trading in 'OneCoins' in Germany". BaFin Federal Financial Supervisory Authority. Archived from the original on 17 December 2019. Retrieved 19 December 2019.
  43. ↑ Bangkok Post (28 April 2017). "BoT warns public about OneCoin currency". Bangkok Post. Archived from the original on 22 January 2023. Retrieved 28 April 2017.
  44. ↑ IFSC (29 May 2017). "One Life Network Limited". Archived from the original on 8 September 2017. Retrieved 30 May 2017.
  45. 1 2 Behind MLM (20 June 2017). "OneCoin Vietnamese regulatory document forged, govt says". Archived from the original on 24 June 2017. Retrieved 22 June 2017.
  46. ↑ Báo Đấu thầu (20 June 2017). "Cảnh báo việc giả mạo văn bản của Bộ Kế hoạch và Đầu tư, Cục Quản lý đấu thầu" (in Vietnamese). Archived from the original on 22 June 2017. Retrieved 22 June 2017.
  47. ↑ The Sofia Globe (19 January 2018). "Bulgarian special prosecutors join in anti-money laundering operation against OneCoin". Archived from the original on 19 January 2018. Retrieved 19 January 2018.
  48. ↑ "Central Bank of Samoa Blocks All OneCoin Cryptocurrency Transactions". Central Bank of Samoa. 21 March 2018. Archived from the original on 7 May 2018. Retrieved 6 May 2018.
  49. ↑ Central Bank of Samoa (21 March 2018). "Warning on ONECOIN Cryotocurrency". Archived from the original on 7 May 2018. Retrieved 6 May 2018.
  50. 1 2 3 King, Chris (12 September 2023). "Sebastian Karl Greenwood: Swedish 'OneCoin' Founder Sentenced To 20 Years In Prison". EuroWeekly News. Retrieved 17 October 2023.
  51. ↑ "'Cryptoqueen' brother admits role in OneCoin fraud". BBC News. 14 November 2019. Archived from the original on 14 November 2019. Retrieved 19 November 2019.
  52. ↑ "OneCoin lawyer found guilty in 'crypto-scam'". BBC News. 21 November 2019. Archived from the original on 23 November 2019. Retrieved 24 November 2019.
  53. ↑ "Cryptoqueen: How this woman scammed the world, then vanished". BBC News. 24 November 2019. Archived from the original on 21 December 2020. Retrieved 24 November 2019.
  54. ↑ Crawley, Jamie (18 May 2021). "$4B Ponzi Scheme OneCoin and 'CryptoQueen' Leader Found in Default in US Lawsuit". Yahoo Finance. Archived from the original on 19 May 2021. Retrieved 19 May 2021.
  55. ↑ "Europe's most wanted". Europe's most wanted. 11 May 2022. Archived from the original on 5 June 2022. Retrieved 11 May 2022.
  56. ↑ Dragu, Florentina (12 May 2022). ""Regina cripto", pe lista celor mai căutați fugari VIDEO". Profit.ro (in Romanian). Archived from the original on 25 September 2022. Retrieved 30 June 2022.
  57. ↑ Dilanian, Ken; Winter, Tom (30 June 2022). "The 'CryptoQueen' is now one of the FBI's 10 Most Wanted". NBC News. Archived from the original on 3 July 2022. Retrieved 30 June 2022.
  58. ↑ "Bulgarian Woman Charged For Role In Multi-Billion-Dollar Cryptocurrency Pyramid Scheme "OneCoin" And Extradited From Bulgaria To The United States". www.justice.gov. 21 March 2023.
  59. 1 2 Byrne, Rob (9 June 2023). "Cryptoqueen: Adviser to missing fugitive disappears". BBC News. Retrieved 10 June 2023.
  60. ↑ "Southern District of New York | Co-Founder Of Multibillion-Dollar Cryptocurrency Scheme "OneCoin" Sentenced To 20 Years In Prison | United States Department of Justice". www.justice.gov (Press release). 12 September 2023. Retrieved 17 October 2023.

Further reading

Media related to OneCoin at Wikimedia Commons

This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.