Federal prosecutors in New York announced criminal charges against the alleged leaders of OneCoin, a multibillion-dollar international pyramid scheme. Konstantin Ignatov and his sister Ruja Ignatova, the founders of the OneCoin ruse, were charged on March 6 in Los Angeles. The two were accused of “wire fraud, securities fraud and money laundering offences”.
While Ignatov has been arrested, prosecutors said Ignatova disappeared in October 2017 and remains at large.
OneCoin was established in 2014 and is based in Sofia, Bulgaria. They implemented their game-plan in the classic Ponzi way, a multi-level marketing network through which members receive commissions for recruiting others to purchase crypto packages. The company claim to have more than 3 million members worldwide and is still in operation.
As a result of falsehoods that the siblings and others made about OneCoin, victims invested billions of dollars worldwide in the fraudulent cryptocurrency.
The press release says that records obtained in the course of the investigation show that between the fourth quarter of 2014 and the third quarter of 2016, OneCoin Ltd. generated $3.7 billion in sales revenue and earned ‘profits’ of $2.5 billion.
They Started The Business With Fraud In Mind
They contend that the OneCoin cryptocurrency is mined using their own servers which are maintained and operated by the company, and that the value of OneCoin is based on market supply and demand. But neither of those claims are true. OneCoins are not mined at all and the value is determined internally.
The investigation revealed that they knew what they were doing was fraudulent and, in fact, built the business with that in mind. In an email between the siblings, Ignatova discussed her thoughts on an exit strategy for OneCoin. The first option she listed was to “take the money and run and blame someone else for this”.
Manhattan US Attorney Geoffrey Berman said: “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”.