Brief Summary of OneCoin Scheme
The world of cryptocurrency is gaining more bad press with another pyramid scheme accusation. This time, it’s cryptocurrency market OneCoin, who is being accused of fraud. OneCoin was founded in Sofia, Bulgaria in 2014 by siblings Ruja Ignatova and Konstantin Ignatov. However, instead of the OneCoin investors earning money, only the siblings benefited financially.
OneCoin allows members to receive a commission for selling OneCoin investment packages to others outside of the organization. In a multi-level marketing approach, the original investor recruits someone outside of the organization. Then, they urge a new member to recruit new members outside of the organization. Meanwhile, only the founders made a profit, while the recruits and new investors suffered.
Soon after OneCoin was exposed as a sham, the United States Justice Department released a press release. In their release, they outline that from the company’s inception to the present, they maintained over three million customers. These three million customers allowed for OneCoin to generate over $3.7 billion dollars in revenue, with a net profit of $2.5 billion.
Unnoticed Red Flags
Countries around the world, including Belgium, Italy, Hungary, Germany, China and more warned people of the OneCoin project due to pyramid scheme and fraud concerns.
In 2017, Ruja disappeared from the cryptocurrency scene, leaving her brother in charge of the successful OneCoin market. Konstantin took on the role of a corporate leader and met with investors in Las Vegas. During the meeting, investors asked how they could cash out their investments when they were through using the market. In response, Konstantin stated that anyone looking to cash out did not understand the mission of OneCoin and should leave the room.
The warnings from international governments, disappearance of one of the co-founders, and harsh words for investors brought about more suspicion. Despite these warning signs, millions continued to invest.
Indictments and Arrests
On March 6, 2019, U.S Officials arrested Konstantin at the Los Angeles International Airport. He is charged with wire fraud for his role in the operation of a multi-billion dollar cryptocurrency pyramid scheme. If found guilty, Ignatov faces 20 years in prison. His sister, Ruja won’t get off as easy but is still missing. She is charged with wire fraud, conspiracy to commit wire fraud, securities fraud, and conspiracy to commit money laundering and can face 80 years in prison. She is also charged with one count of conspiracy to commit securities fraud, which adds another five years in jail.
Taking Steps for Protection
OneCoin claims to have a private blockchain network, but no evidence was found. Additionally, the company issued fake coins to its investors. Without blockchain technology, there are no records of the crypto market or data of the transactions. The people who used OneCoin will not have a data set to work from to show their investment timeline. Without solid data and evidence, receiving restitution for their invested coin will prove difficult.
In this specific case of OneCoin, little can be done, but a digital forensic investigation can help with fraud cases. If you’re the victim of fraud, SecureForensics might be able to help. Call us for a free phone consultation at 1-800-288-1407.