OneCoin Leaders Charged in Multibillion-Dollar Pyramid Scam

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OneCoin Leaders Charged in Multibillion-Dollar Pyramid Scam

Postby seemslikeadream » Fri Mar 08, 2019 4:02 pm

Accused leader of multibillion dollar cryptocurrency pyramid scheme arrested at LAX.

Image


OneCoin Leaders Charged in Multibillion-Dollar Pyramid Scam

Chris Dolmetsch
March 8, 2019, 9:29 AM CST

Ruja Ignatova
Photographer: Paul Hampartsoumian/REX/Shutterstock

The leaders of an alleged multibillion-dollar international pyramid scheme that involved the marketing of the cryptocurrency OneCoin were charged by U.S. prosecutors with fraud and money laundering.

The alleged head of the scheme, Konstantin Ignatov, was arrested Wednesday at Los Angeles International Airport and charged with conspiracy to commit wire fraud, Manhattan U.S. Attorney Geoffrey Berman said in a statement. Ignatov’s sister Ruja, the founder and original leader of OneCoin, was charged with wire fraud, securities fraud and money laundering. She hasn’t been arrested.

OneCoin generated 3.4 billion euros ($3.8 billion) in revenue from the fourth quarter of 2014 to the third quarter of 2016, prosecutors said. The alleged value of OneCoin rose from 50 euro cents to 29.95 euros in January and the company claimed to have more than 3 million members worldwide, prosecutors said.

But OneCoin had no real value, offered investors no way to trace their investments and couldn’t be used to buy anything, according to the U.S. The scheme operated as a marketing network, where members got paid commissions for recruiting others to purchase cryptocurrency packages, prosecutors said.

"These defendants created a multibillion-dollar ‘cryptocurrency’ company based completely on lies and deceit," 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.”

Ruja Ignatova created OneCoin in 2014 in Sofia, Bulgaria, and headed the organization until she vanished from the public eye in October 2017, according to prosecutors. Her brother assumed the top leadership position in the middle of 2018, they said.

Bulgarian authorities raided the offices of One Network Services EOOD, a Bulgarian commercial agent of OneCoin Ltd., in January 2018 as part of an international investigation into allegations that the virtual currency may have been used by organized-crime groups. Prosecutors in Sofia said at the time that OneCoin was also being investigated in the U.K., Ireland, Italy, U.S., Canada, Ukraine, the Baltics and other countries.

China prosecuted 98 people and recovered 1.7 billion yuan ($253 million) in 2018 in connection with the alleged pyramid scheme, according to a report in state-owned Procuratorial Daily

(Updates with details of charges.)

https://www.bloomberg.com/news/articles ... mid-scheme
Mazars and Deutsche Bank could have ended this nightmare before it started.
They could still get him out of office.
But instead, they want mass death.
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Re: OneCoin Leaders Charged in Multibillion-Dollar Pyramid S

Postby seemslikeadream » Sat Mar 09, 2019 10:06 am

A cryptocurrency ponzi scheme is finally unraveling

Matthew De SilvaMarch 8, 2019

REUTERS/Dado Ruvic

Bitcoin has inspired thousands of copycats, some worse than others.


For the last five years, a Bulgarian brother-sister team ran a fraudulent, multibillion-dollar cryptocurrency called OneCoin. Together, the US Justice Department says, Konstanin Ignatov and Ruja Ignatova duped investors who bought OneCoin through a global, multi-level marketing network.

Ignatov, the brother, was arrested at Los Angeles International Airport on Wednesday. He has been charged with one count of conspiracy to commit wire fraud. His older sister, who masterminded the operation, “remains at large.” The complaint against Ignatov, unsealed on Thursday, provides a glimpse of how OneCoin rose and then finally unraveled. (Note that OneCoin should not be confused with a cryptocurrency that uses the same name, but is issued by Xunlei, a Chinese technology firm.)

Hatching a plan

In a June 2014 email to an associate, identified only as “Founder-2,” Ruja fantasized about their potential riches. She called herself the “bitch of wall street.”

Over the last several years, Ignatova lied to investors about the way OneCoin functioned and the returns it offered. Her brother, who initially served as her personal assistant, later assumed more prominent roles for the company.

In contrast to bitcoin, OneCoin existed on a private network. Thus, the siblings were able to control the cryptocurrency’s supply and price, but they falsely claimed these were determined by the market.

A cover story

Ruja and her partners made OneCoin seem more legitimate by using crypto jargon. In August 2014, Founder-2 told Ruja they could entice investors by claiming OneCoin used mining, the transaction processing mechanism that generates bitcoin: “The so called ‘mining’ of coins is a concept that is very familiar in the industry and a story we can sell to the members.”

Later, the siblings collected investor funds without even creating new coins. All the while, they charmed buyers by offering commissions for referrals, selling a variety of trading packages, and claiming that OneCoin would pursue an IPO.

Remarkably, between 2014 and 2016, OneCoin collected more than 3 billion euros ($3.4 billion dollars) in sales revenue. Nearly 60% of that revenue apparently came from Chinese investors.

Cracks begin to show

As early as March 2015, though, Ruja was under duress because OneCoin was suspected of cooking the books. To assuage investor concerns, the company hired an auditor, but Ruja was worried. “I think I cannot start auditing, as I cheat currently on coins,” she wrote to Founder-2. “I need to find a way.”

Ruja also grew worried as more and more investors excitedly bought into OneCoin. In August 2015, she anxiously emailed Founder-2 again. “We are fucked,” she wrote. “[T]his came unexpected[ly] and now needs serious, serious thinking.”

Still, the siblings persisted with their cryptocurrency , and it was eventually buoyed by growing interest in bitcoin and alternative cryptocurrencies. A September 2016 text from Konstantin to Founder-2 helps illustrate the extent of their malice: “[A]s you told me, the network would not work with intelligent people ;)

Over the last few years, the siblings continued to travel the world, touting OneCoin at conferences. However, investors became anxious as they struggled to convert the cryptocurrency into actual money. The company only made OneCoin available for trading on its own, private exchange, but even that was taken offline. Meanwhile, the siblings appear to have laundered investor funds through a series of bank accounts.

Slowly, it has dawned on investors that OneCoin was entirely artificial, and because the siblings made the coin available to US investors, Ignatov was finally arrested.
https://qz.com/1568908/onecoin-is-unrav ... id-scheme/
Mazars and Deutsche Bank could have ended this nightmare before it started.
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Re: OneCoin Leaders Charged in Multibillion-Dollar Pyramid S

Postby DrEvil » Sat Mar 09, 2019 12:06 pm

At this point it would be easier to list the cryptocurrencies and companies that aren't Ponzi-schemes or scams.

There's a new scandal every week. One day an exchange is ripped off by hackers or insiders, the next the only person with the correct password suddenly "dies" while traveling in South-East Asia and takes a small fortune with him, and the day after that it turns out that, haha, the South American precious metals mines that back up a currency don't actually exist. It also turned out that the currency called Ponzicoin wasn't supposed to be taken seriously. Who would have thought (not the idiots who were buying it, that's for sure)?

The whole thing is an unholy mixture of hardcore libertarians and criminals seasoned with a thick layer of morons (the Venn diagram is basically just a circle). I prefer the alternative name for bitcoin: Dunning-Krugerrands.
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