Introduction
The cryptocurrency market is still progressing and developing. Since the core technology behind cryptocurrencies, i.e., blockchain is still considerably new, it means that people, in general, have limited knowledge available on the subject. There are many social media sites and media outlets that have painted cryptocurrencies as the way to become rich overnight. Therefore, hackers, threat actors, and scammers can take advantage of people who do not have enough information and education and use it to defraud them with unrealistic cryptocurrency investment ideas.
Introduction to OneCoin
OneCoin was an offshores cryptocurrency organization started in Bulgaria and was registered in Dubai. The company was founded by Ruja Ignovata, who is a Bulgarian-German citizen. The company started to operate in 2014, and it offered a centralized cryptocurrency that was hosted by private servers under the supervision of OneCoin Limited. The business model of OneCoin was to sell educational material concerning cryptocurrency trading.
The users who purchased the membership from OneCoin were able to receive educational circulars distributed by OneCoin. A single package from OneCoin could cost from 100 euros to 118000 euros. In some documented cases, the package issued by OneCoin was also sold for 225500 euros. In addition to the educational material, OneCoin Packages also arrived with tokens that the users can deploy to mine in OneCoin currency.
OneCoin currencies were only tradable on the exclusive OneCoin exchange. Access to the OneCoin exchange was only granted to the members who had paid the company for more than just the starter package. The platform allowed the users to exchange their digital currency coins against euros using a virtual wallet reserve. However, the exchange also allotted a maximum selling limit for the users daily.
How did the OneCoin Scam Unravel?
The educational material that OneCoin was selling for hundreds and thousands of euros was mostly plagiarized from different online sources. The buyers of the OneCoin packages were under the impression that they were getting exclusive insights into the cryptocurrency market and getting some special information from the expert analysts working at OneCoin. However, the information that they paid so much money for was stolen and recycled.
On the other hand, the OneCoin exchange only allowed users who had purchased more than the starter package an excess of the exclusive OneCoin exchange. OneCoin tokens were not listed on any other cryptocurrency exchange other than just the private one. Furthermore, the users had limited withdrawal options for converting their expensive OneCoin digital currencies into euros. Depending on how much they had already paid for a package upgrade, their withdrawal limit would increase.
After duping a lot of people with fake information and Ponzi Scheme coins, the OneCoin exchange issued a sudden warning in 2016 that the exchange was going offline for 14 days on account of repairing the break. The internal memo also claimed that the OneCoin was working on integrating with other blockchains and working to improve its scalability on account of an increasing number of miners. After 14 days, the OneCoin exchange opened once again, but there were so many changes.
The transactions on the network had expired, and daily limits for the account holders did not change. In January 2017, the exchange was eventually shut down. However, the workers who were operating the OneCoin exchange kept receiving funds from several users. OneCoin founder Ruja Igonvate was charged with fraud and was dubbed as one of the biggest Ponzi scheme masters in history by Times magazine.
Who Discovered OneCoin Scam?
In 2016, Daily Mirror, a newspaper operating out of Britain, published a report about OneCoin and claimed that the organization was a get-rich-quick project and even called it a cult. Furthermore, the report also called OneCoin intrinsically worthless. In 2017, the Supervision Commission or FSC of Bulgaria issued a warning about the risks involved with working with cryptocurrency exchanges. Following the warning, OneCoin wrapped up its business in the European Balkan nation and continued to operate using private banking wires.
Since the revelations issued by Daily Mirror, a considerable number of countries have noticed a lack of authenticity in OneCoin. The financial regulators in Finland, Latvia, Norway, Sweden, and Bulgaria have put OneCoin and its management on the investigated businesses list. Prosecutors in several European countries have filed cases against Ruja Ignavota and her brother Konstantin Ignavota. The Direct Selling Association of Norway also issued a warning against OneCoin in 2016.
In the same year, the Italian Antitrust Authority opened an interim injection against One Network Services Limited, which is one of the companies that were operating in association with OneCoin. The Italian Authority barred One Network Services Limited from promoting OneCoin services in the region, claiming that it was an illegal pyramid scheme. The Italian Competition Authority or AGCM banned all activities around OneCoin in 2017 until further notice.
Other countries and financial regulators that also issued a warning against the OneCoin network include the Hungarian Central Bank in 2016, the Croatian National Bank in 2017, the Federal Financial Supervisory Authority of Germany in 2017, Bank of Thailand in 2017, Europol in 2018, Central Bank of Samoa in 2018, FinCEN in 2020, and Federal Bureau of Investigation in 2022. Ruja Ignatova is currently on an FBI top 10 fugitives list. She also has a $100,000 reward for information that can facilitate her arrest.
Who was the Founder of OneCoin?
Ruja Ignatova was born in the sixteenth largest nation in Europe called, Bulgaria. Her family eventually immigrated to Germany when she was ten years old. She completed her BA graduation degree from the University of Oxford. She also completed her Ph.D. from the University of Constance in private international law. Before starting her business career, she also worked at McKinsey & Company, which is one of the three largest management consultant companies in the world. She established OneCoin with Karl Sebastian Greenwood, who joined the operations as an independent distributor according to his LinkedIn profile that is still active.
Greenwood is considered the right-hand man of Ruja Ignatova, and he holds a bachelor’s degree in Marketing and Finance from the University of London, a BBA from the European Business School, and a Business Administration Bachelor’s degree from New York College. He also claimed to have an Associate’s Degree in Economics from Ostra Real College Stockholm. Both he and Ruja are the main persons of interest in the OneCoin scam.
The Criminal History of OneCoin Founder
Ruja Ignatova was a doctor holding a Ph.D. who started her career in founding and running scam organizations several years before the debut of OneCoin. In 2012 she received a criminal sentence in Germany for fraudulent acquisition of a company accompanied by her father named Plamen Ignatova. The company under her ownership eventually filed for bankruptcy under dubious pretexts shortly afterward. Ignatova received a 14 months Suspension sentence in this case by German authorities.
A suspended sentence is a time allotted to white-collar criminals that grant civil liberties as long as they don’t commit a crime during the sentencing duration. However, only a year later, she once again had an encounter with the law enforcement agencies in connection with a marketing scam operating under the name of BigCoin. Eventually, she went on to found OneCoin in 2014, which went down in history as one of the biggest Ponzi Schemes in the world.
$4 Billion Ponzi Scheme
OneCoin has stolen an estimated amount of $4 billion from their Ponzi scheme organization as an estimate issued by the law enforcement agencies in the USA. The government of China managed to recover around 1.7 billion Yuan during a prosecution proceeding of 98 people associated with the OneCoin scam. However, Ignatova managed to escape from the paws of law enforcement agencies in 2017 when the government of the United States issued an arrest warrant for her.
The US authorities managed to detain her brother Konstantin Ignatov, and she eventually pleaded guilty to the charges of financial fraud and money laundering in 2019. He received a 90 years prison sentence and is currently serving his time. On the other hand, Greenwood was recovered and arrested by the police in 2018,, and he is also serving time at the Manhattan Metropolitan Correctional Center. His sentencing hearing has been moved to 2023, according to various media reports.
What Happened to OneCoin Founder?
Ruja Ignatova, who has earned the title of the Missing Cryptoqueen, is a highly educated white-collar criminal who has been on the run from law enforcement agencies since 2017. The media and social media outlets have taken a keen interest in the case where a woman managed to run a multi-billion dollar international scam and managed to escape the law enforcement agencies from several countries thus far.
Sky news Germany, Fremantle indie-production, and Channel 4 from the UK are recently coming together to produce a docu-series on her life and her criminal career. The docu-series that is called Crypto Queen will shed more light on the con and the mastermind behind it.
The BBC radio 5 live also aired a special podcast on the OneCoin scam called the missing crypto queen. OneCoin’s story has also inspired writers to pen down the tale in the form of a book titled The Missing Crypto Queen authored by Jamie Bartlett. She has been added to the top ten most wanted list of FBI and at large.
How Did the OneCoin Scam Become Popular?
At first glance, OneCoin can seem like just about any other financial scam. However, the Ponzi scheme was extremely elaborate and panned out with such dexterity that it managed to dupe not thousands but millions of well-versed and well-educated people.
Ruja Ignatova spent a lot of time perfecting the scam, and she introduced OneCoin as a currency that planned to become bigger than Bitcoin.
In 2016, she hosted an event at the Wembley Stadium that was attended by 90 thousand people. Around the same time, OneCoin became the second largest cryptocurrency in the world by market cap. In 2015, the first public allegations about OneCoin being a Ponzi scheme made an appearance, and by 2018 law enforcement authorities of several countries started to raid OneCoin offices which led to the arrests of Sebastian Greenwood and Konstantin Ignatov.
OneCoin promised the users that it would ensure safer and more secure financial transactions, ease of access, user-friendly, and cheap and time-saving monetary exchange options. OneCoin miners believed that the token would eventually enter the global trade markets and transform the international trade payment practices. However, the OneCoin network did not have a real blockchain. Some estimates suggest that the OneCoin scam managed to generate around $15 billion in profits.
OneCoin: Biggest Scam in the Crypto World
Financial scams within and outside the cryptocurrency markets are not very unusual. However, most financial scams are caught or reported as soon as they go national on account of the attention and involvement of high-stakes financial investors. However, OneCoin managed to attract users on an international level and gained notoriety for stealing billions of dollars, which, even though unethical, is not a small feat.
OneCoin founder Dr. Ruja entered the cryptocurrency space when it was relatively just getting started. Despite the presence of the internet, not many people knew about blockchains and cryptocurrencies, and many were astonished to see the massive inflation of Bitcoin prices during the latest bull runs. Ignatova also paid a lot of attention to the presentation by presenting herself as a highly educated and successful individual. She also used tactics such as a paid Forbes front page feature that was meant to attract more attention to OneCoin.
She recruited Sabestian Greenwood, who already had a listed criminal background. He had been part of an MLM financial scam called Unaico before joining OneCoin. Even though he played an important role in executing the OneCoin scam, he is considered the face of the scam to make it look more believable. Ignatova also recruited her brother, who was not as smart and good at carrying out tasks without asking many questions. He is dubbed as a gullible idiot who was also a womanizer and eventually pleaded guilty in place of her sister.
Doctor Ruja Ignatova was also lucky to enter the cryptocurrency market during a time when many investors were looking for a second Bitcoin that they could invest in and make big banks. She was aware of the lack of information around blockchain and cryptocurrencies and used this fact by offering educational material that invited people to buy subscription packages and learn to mine the worthless OneCoin digital currencies.
She was introducing the next Bitcoin to the people in the form of a OneCoin scam around the time when the Bitcoin price had reached $500 per unit. At the same time, she also offered the option to the investors to become informed cryptocurrency investors who had a Ph.D. At the same time, many other cryptocurrencies were entering the space. However, OneCoin paid special attention to its extravagant marketing events that lured people like fireflies into the scam.
A woman from the UK named Jen McAdam reported to the media that she had invested around 10 thousand euros into OneCoin and also invited several of her family members to invest an additional 25 thousand euros. However, McAdam eventually started to read about different types of cryptocurrency scams and became suspicious.
When she investigated OneCoin, she discovered that the organization did not operate any blockchain and went to the authorities. Her story was aired by BBC eventually and revealed that OneCoin was only an over-glorified SQL server-based application. However, further investigation revealed that OneCoin had a private blockchain, but it was only a rudimentary application and could not conduct any real transactions.
OneCoin was an international cryptocurrency scam that conducted operations from 2014 to 2019, and many cases on the organization are still open and under investigation. The scam started to unfold and became very obvious when Ruja Ignatova did not show up for an international OneCoin conference in Lisbon and went AWOL. Law enforcement agencies started to raid the offices of OneCoin, and authorities also issued arrest warrants for all key personnel at OneCoin.
Latest Developments
Bitcoin.com recently published an article where one of the OneCoin scammers, Sebastian Greenwood, was accused of moving millions of dollars from behind bars. The allegations were made by Jonathan Levy, who is a lawyer representing the victims of the OneCoin scam.
Levy reported that Greenwood moved around $20 million while serving his jail sentence using a Contraband mobile device. He also slammed the Securities and Exchange Commission and other financial regulators of the United States for their failure to seize the funds of OneCoin operators. The lawyer also claimed that the scam amount collected by OneCoin has been used to acquire millions of dollars’ worth of properties and has been roaming freely. Ruja Ignatova, who has been at large till now, is also purported to be the owner of a $17.75 million mansion in Kensington district, London.
Conclusion
Cryptocurrency scammers are not always some underground hacking groups who can fool people without proper education and knowledge. The example of OneCoin indicates that the cryptocurrency scammers can also be PhD-holding doctors and world-renowned business managers who offer unrealistic returns and use marketing and psychological tactics to lure unsuspecting individuals.
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