Ruja Ignatova, the founder and public face of “cryptocurrency” investment scheme OneCoin, is on the run from the law after she and her brother Konstantin Ignatov were indicted by U.S. authorities for wire fraud and money laundering. Ignatov was arrested at Los Angeles International Airport last Wednesday, though his sister remains at large.
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Ignatova and Co-Founders Sold ‘Fake Coins’, Planned to Run With the Money, Say Investigators
In a release that described OneCoin (ONE) as a “fraudulent cryptocurrency” and a “pyramid scheme”, the U.S. Attorney’s Office for the Southern District of New York announced Ignatov’s arrest and charges against he and Ignatova, whose current whereabouts remain unknown.
The siblings, of Sofia, Bulgaria, controlled an organization that claimed over 3 million members (investors and affiliates) worldwide and allegedly made €2.2 billion EUR in profits between 2014 and 2016.
(Notably, that’s far less than many “legitimate” ICO and blockchain token projects — though OneCoin’s glamor and reach set it apart from most others in the space.)
New York authorities allege Ignatova and later her brother ran the project knowing it was fraudulent, and quoted emails discussing an “exit strategy” that involved taking the money and running, and blaming someone else for the mess it left behind. Additionally, OneCoin “lacks a true blockchain” — Ignatova, the indictment read, had begun selling the assets to “victim-investors” even before there was any kind of digital record of their existence, calling them “fake coins”.
Despite various promises of merchant adoption, massive gains in coin value and several “launches” and “public offerings”, OneCoin never sold anything other than hype as it recruited new members to its multi-level marketing scheme, the announcement read.
Remind Me Again… What Is OneCoin?
OneCoin was (or is, since the project still appears to be active) the digital currency of the OneLife corporation. Launched in 2014 to a series of glitzy parties and promotional events for investors, OneLife still features several videos and photos of Ignatova on its website, thought he company’s Twitter account hasn’t posted since last December. However as recently as January 2019, OneCoin was still promising its token was “one step away” from listing on a public exchange.
The project, like so many others in the cryptocurrency universe, promised nothing less than to revolutionize the global economy and lift billions out of poverty. Unlike many other crypto projects though, it was always treated with extreme skepticism from serious members of the community. All “mining” was performed by computers at the company itself (causing doubt over whether there were any actual assets at all) and OneCoin has never listed on a reputable crypto exchange. Its purported value came only from what its leaders deemed it to be worth at the time, and investors were always incentivized (in many cases pressured) to keep or increase their holdings, rather than attempt to cash out.
One incident that strained credulity was the October 2016 launch of a “new blockchain” for OneCoin, which automagically doubled investors holdings of the token. Many promoted the deal, encouraging friends and families to increase their shares in preparation for the bonanza.
By early 2017 the project was already in trouble, becoming the subject of several investigations across a number of countries, arrests of affiliates and investor anger over failure to deliver on promises of global adoption and wealth. By the end of that year, Ignatova had disappeared from public life.
Army of Devotees
OneCoin (and its founder’s supposedly astronomical intelligence) was fiercely defended by its army of devotees, who would appear en masse in comment forums and on social media any time the project was accused of wrongdoing. Its lawyers often hit critics (including this publication) with threats of legal action, none of which were ever pursued.
Even though it was never taken seriously by the mainstream cryptocurrency community, OneCoin nonetheless damaged its image in the eyes of people unable to differentiate between a “real” crypto project and an allegedly fraudulent one.
Targeting U.S. investors was a reckless tactic that eventually drew attention from U.S. authorities with greater global reach than their regional counterparts. However it was likely too lucrative to resist, and those investors contributed a large percentage of OneCoin’s haul.
Should OneCoin have stayed out of the United States? Will authorities be able to locate and arrest Ruja Ignatova anytime soon? Let’s hear your thoughts in the comments.
Images via OneCoin, YouTube
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