OneCoin Leader Arrested in LA by the FBI!

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In early March, the FBI arrested the leader of OneCoin Konstantin Ignatov. He is the younger brother of Ruja Ignatova who was the previous leader of OneCoin. Konstantin was arrested on March 6, 2019, in Los Angeles. It is one of the most talked-about cryptocurrency pyramid schemes/scams in the world.

They have an acclaimed user base of 3 million people. They have been investigated multiple times, charged by various governments, yet somehow they still remain in business. Another thing is their obsessive followers. They’re almost like a cult and they do not believe anything that disbelievers say. It almost seems like they are training on how to fight criticism about OneCoin. However, their scheme has brought in more than $4 billion from its users worldwide. 

Arrested in Los Angeles Airport

Before March 6, Ignatov travelled to the U.S. to conduct business related to One Coin. Specifically, it turns out that Ignatov lied at the U.S border customs about his reason for visiting. He claimed that he’s not here for doing OneCoin related business. Later he met with Mark S. Scott, a former partner of a major US law firm which possibly assisted Ignatova to launder more than $400 million. After the business trip, Konstantin Ignatov was arrested at the Los Angeles International airport for committing wire fraud. This carries a maximum sentence of 20 years in prison.

Moreover, the FBI is charging Ruja Ignatova with wire fraud, securities fraud, and other charges. However, she is still at large and wanted in the U.S.

What is One Coin?

According to the company, its main business is selling educational material for trading. Members are able to buy educational packages ranging from 100 euros to 118,000 euros. Each package includes “tokens” which you can assign to “mine” OneCoins. The company claims that they have mining servers at two locations in Bulgaria and one site in Hong Kong. Each level (except six and seven), or package, gives new educational material which presumably OneCoin is plagiarising from several sources.

Standard packages. Source: http://onelife.associates/packages/
Automining packages. Source: http://onelife.associates/packages/
Combo packages. Source: http://onelife.associates/packages/

The company and its recruiters claim that they do not sell cryptocurrency but only educational material. However, in a typical recruiting meeting most of the time recruiters talk about investing in cryptocurrency and they barely mention the educational material.

The next “Bitcoin”

OneCoiners claim that OneCoin will be the next Bitcoin. I’ve heard this multiple times when speaking to a believer. They claim that OneCoin, just like Bitcoin, has miners and has a blockchain. However, the only miners are the company itself.

Furthermore, they claim that the price of their coin is based on market supply and demand. Yet the FBI investigation revealed that the price of OneCoin determines their leaders internally. In early January 2019, the company claimed that the price increased from €0.50 to €29.95 per coin, yet it was not a freely-traded “crypto”currency.

OneCoin price “chart”. Source: https://www.justice.gov/usao-sdny/press-release/file/1141986/download

The court documents show that OneCoin generated €3.35 billion in sales revenue and earned €2.23 billion in just two quarters.

There is no blockchain!

The FBI investigation further reveals possibly the most interesting and shocking thing at the same time. It turns out that OneCoin hasn’t had a blockchain at all! They offered no method of tracing transactions to their users.

“Unlike authentic cryptocurrencies, which maintain records of their investors’ transaction history, OneCoin had no real value. It offered investors no method of tracing their money, and it could not be used to purchase anything. In fact, the only ones who stood to benefit from its existence were its founders and co-conspirators.”

William Sweeney Jr.
OneCoin blockchain attributes. Source: http://onelife.associates/due-diligence/

Legal issues

OneCoin has faced multiple courts and investigations in the past, yet somehow they maintain the trust among their user base. They always call these allegations incorrect and abuse others who base their argument solely on facts calling them trolls.

2015

The legal issues date back to 2015, when Bulgaria’s Financial Supervision Commission (FSC) issued a warning of potential risks in new cryptocurrencies, citing OneCoin as an example. After the warning, OneCoin ceased all activity in Bulgaria and started to use banks in foreign countries to handle wire transfers from participants.

2016 – 2017

In December 2016, The Italian Antitrust Authority described their activities as an “illegal pyramid sales system” and ordered them to cease promoting and selling OneCoin in Italy.

On 23 April 2017, Indian police arrested 18 people in Navi Mumbai for organizing a OneCoin recruitment event. A Further investigation started to reveal the higher levels of the pyramid. In May, the investigation recovered $3.77 million in nine bank accounts. A further $11.52 million was transferred out before authorities were able to seize it. Beginning of May 2017, two more people were arrested. Seizing $3.69 million from their bank accounts.

On June 16, 2017, the CEO of OneCoin Ltd. was claiming that the Vietnamese government is licensing them to have legal rights to become used in Vietnam as a digital currency. Later the Ministry of Planning and Investments (MPI) of Vietnam issued a statement that the document which OneCoin used as proof, was fake.

2018

On January 2018, Bulgarian police raided OneCoin’s office in Sofia, Bulgaria, based at the request of the prosecutor’s office in Bielefeld, Germany. German police and Europol took part in the bust and the investigation. Also, 14 other companies, tied to OneCoin, were investigated and 50 witnesses were questioned. Seizing OneCoin’s servers and other material evidence.

These are only a few law issues OneCoin has had in their past.

OneCoin started out as an intentional scam

The FBI investigation reveals that from the beginning OneCoin founders Ruja and Konstantin Ignatov’s were planning to make this a scam project. Their primary intent was to defraud investors, according to the court documents. The FBI dug up old e-mail conversations between Ignatova and her business partner. They exchange opinions about how to run the company and how to do a proper “exit scam”. In one of the e-mails, Ignatova describes her ideal exit strategy: “Take the money and run and blame someone else for this…” Also, they are somewhat of laughing about their investors, calling them idiots and calling their platform a scam. 

Source: https://www.justice.gov/usao-sdny/press-release/file/1141986/download
Source: https://www.justice.gov/usao-sdny/press-release/file/1141986/download

One religion – One Coin

Of course, OneCoiners believe that all the authorities are lying and not telling the truth. On the other hand, they believe what the owners are telling them. They even question proven facts, and call it trolling:

A user with a nickname “SwissAndrew” on OneCoin’s Debate blog posted:

“There is no way in hell that the established banking elite, especially the Wall St. bankster crowd, would ever allow such an independent system to be established. Imagine a trading eco-system not needing to use banking services!
OC/DS (OneCoin/DealShaker) is on the verge of becoming a reality – unique in the world
That is why they are moving heaven and earth to destroy it before it can get started
This hit has been in planning for a long time, that much is obvious.”

Official press-release

A few days ago, they came out with a press-release, explaining the situation. Ironically enough, they called transparency one of the core values of OneCoin. It’s funny because their business seems like completely the opposite. The blockchain doesn’t store transactions. The price is pumped internally. Almost all of their leaders at some point have been facing the law and they call themselves transparent.

Official OneCoin press-release. Source: https://www.onecoin.eu/uploads/media/default/0001/01/24c006886a3e9aca9b150fc5229a4a8a5bd3114a.pdf

“Old-school pyramid scheme on a new-school platform”

The dark side

On one side, there is no question about the intentions of OneCoin owners. For multiple years they have been telling their investors that the price of their coin will increase and that soon OneCoin will hit the exchanges. It is clear that they haven’t moved pretty far from these plans. Hence the value of their coin is still determined internally and their coin hasn’t yet been added to an actual exchange.

“These defendants executed an old-school pyramid scheme on a new-school platform… defrauding investors out of billions. Our Office urges all crypto investors to scrutinize investment opportunities, recognize the prevalence of fraud in this underregulated space, and proceed with caution.”

Cyrus R. Vance Jr

The bright side

On the other side, somehow OneCoin has been able to maintain their business for all these years despite all the law issues they have been facing. They actually have a very large user base all across the globe. Some call it a cult, and it almost looks like one, because their supporters are somewhat blinded by the promises of the owners. They all can argue very well against almost anyone who poses disbelief.

Conclusion

One thing is clear – we would not recommend investing in OneCoin just because of the fact that they have had so many legal issues. Of course, after all these years they might actually build a blockchain and get into an exchange or have an actual use case. But when comparing to Bitcoin and other investment opportunities, OneCoin doesn’t stand a chance.

Bitcoin and other crypto investments, compared to OneCoin.

Always do your own research and follow your gut. Do not regret anything. Even the smartest and most cautious people sometimes make mistakes. 

Read our top article on how two friends were getting in crypto. We put there some pointers on how to get ready for investing and trading with cryptocurrencies.

Source:

https://cryptoslate.com/worse-than-bitconnect-leader-billion-dollar-cryptocurrency-pyramid-scam-onecoin-arrested/
https://www.justice.gov/usao-sdny/press-release/file/1141986/download
http://onecoin-debate.com/viewtopic.php?f=2&t=4541&start=250
https://en.wikipedia.org/wiki/OneCoin#cite_note-29
https://sofiaglobe.com/2018/01/19/bulgarian-special-prosecutors-join-in-anti-money-laundering-operation-against-onecoin/
https://www.thehindu.com/news/cities/mumbai/18-held-for-organising-ponzi-scheme-seminar/article18202122.ece

Photo by niu niu on Unsplash