OneCoin founder Konstantin Ignatov was arrested at the Los Angeles airport on March 6 on allegations of wire fraud and cryptocurrency scams, the Manhattan US attorney’s office announced. An US investigation concluded that OneCoin is in fact a “multibillion-dollar pyramid scheme involving the sale of a fraudulent cryptocurrency.”
Established in 2014 in Bulgaria, the OneCoin operation allegedly involved selling cryptocurrency that didn’t exist, and tampering with prices. It was run by Ignatov, his sister Ruja Ignatova who’s currently in hiding, and a number of others. A third suspect in the OneCoin operation is Mark Scott, charged with laundering half a billion dollars.
The three allegedly took advantage of the cryptocurrency craze to make money off gullible investors by selling coins with zero value. Investors couldn’t track their money or use it to make purchases, said FBI Assistant Director-in-Charge William Sweeney, Jr.
“This is an old scam with a virtual twist,” said IRS Special Agent in Charge John R. Tafur. “As alleged in court documents, the cryptocurrency OneCoin was established for the sole purpose of defrauding investors. Ignatov and Ignatova allegedly convinced victims to invest in OneCoin based on complete lies about the virtual currency.”
Despite charges and Ignatov’s arrest, OneCoin is still active and making money off investment funds wired from people around the world to buy OneCoin packages. According to US law enforcement, bank records show that “OneCoin Ltd. generated €3.353 billion in sales revenue and earned ‘profits’ of €2.232 billion” between 2014 and 2016.
They each face at least 20 years in prison for their actions.