March 11, 2019
(CMR) The leader of a prolific cryptocurrency ponzi scheme, OneCoin, was arrested and charged March 6 allegedly scamming investors out of billions.
The United States government has issued a 32 page detailed indictment against Konstantin Ignatov and other unnamed persons; for an alleged cryptocurrency scam and Ponzi scheme for investors in his OneCoin company. It purports that $1.2 billion in OneCoin Ltd. investor funds were launched through 21 countries; including the Cayman Islands.
Ignatov served as a “high-level executive, promoter and spokesperson for the OneCoin organization and appeared at events in Thailand, Singapore, Colombia, Argentina, Brazil, Paraguay, Bulgaria, France and Spain and offered a digital cryptocurrency through a global multi-level marekting (“MLM”) network of members.
It is alleged that purposely manipulated the value of the currency by simulating some volatility to create a false appearance that the value fluctuated based on trading.
Like all MLMs the success of the program is based on individuals being compensated for recruiting new members who purchase OneCoin trader packages; paying commissions between 10-25%. Only 60% of commissions are paid to members in withdraw-able cash with the remaining 40% deposited in a “trading account.”
They boasted about having over three million members.
The indictment alleges that he conspired with others to willfully and knowingly “a scheme and artifice to defraud and for obtaining money and property by means of false and fraudulent pretenses.” Ignatov, the defendant, was the “top leader” of OneCoin Ltd.; a company marketing a cryptocurrency. However the US authorities now alleged the entire thing was a multi-level marketing network scam that defrauded people out of billions of dollars. The indictment states:
“This multi-level marketing structure appers to have influced rapid growth of the OneCoin member network. Record that the Team has obtained in the course of the investigation show that, between the fourth quarter of 2014 and the third quarter of 2016 alone, OneCoin Ltd. generated € 3.353 billion in sales revenue and earned “profits” of €2.232 billion. OneCoin continues to operate to this day.”
It further alleges that him and his sister, Ruja Ignatova were the founders and top level leaders until her disappearance around October 2017. Efforts to trace her have been unsuccessful after she traveled from Sophia, Bulgaria to Athens, Greece – her online presence has gone completely dark.
Email correspondence between the two show show that they referred to the coin as “trashy coin” during the concept phase and initial correspondence and the FBI agent believes they fully intended to defraud investors from the onset. He states that:
“I believe this email demonstrates that Ruja developed OneCoin Ltd.'s unstainable compensation structure for the purpose of enticing people to invest in OneCoin trader packages, including the false promise that investors would make a five-fold or ten-fold investment return.”
An undercover Federal Bureau of Investigation agent signed the sworn deposition and including the allegations that they obtained confidential information regarding law enforcement operations in other jurisdictions where they were being investigated.
This case is interesting in light of a similar cryptocurrency MLM that many Caymanians have become involved in since 2018.
Ignatov was arrested on March 6 at Los Angeles Airport. His sister is still missing. She has a German passport. The maximum penalty in the United States for the charges is up to 20 years' imprisonment.