OneCoin: the $15 Billion Scam.
Gone With the Wind: The Extraordinary Tale of Dr. Ruja Ignatova & OneCoin
If you put aside a dollar for every time a friend turned you down by saying, “No I’m not interested. Its a Ponzi scheme,” when you introduced them to Bitcoin, your piggy bank would be overflowing. If all ‘Bitcoin rejection’ piggy banks all around the world were put together, there would be enough to pay the over 3 million investors who got caught in Dr. Ruja Ignatova’s Ponzi scheme, OneCoin.
Table of Contents:
1) Background
2) The Disappearance
3) The Fallout
1) Background
OneCoin was founded by Dr. Ruja Ignatova, a Bulgarian national, and according to her LinkedIn profile, a law graduate and former Mckinsey employee. The first OneCoin transactions can be traced back to late 2014. At a OneCoin conference in June 2016, Ruja proclaimed that OneCoin was the “Bitcoin killer. In two years, nobody will speak about Bitcoin anymore!” she added.
Gullible investors were sold educational material for trading. These courses included cryptocurrencies, trading, investments, financial analysis, and asset management. Packages ranged from 100 euros to 118,000 euros. The package included tokens that could be assigned to mine OneCoins. This was mined by servers in Bulgaria and one site in Hong Kong. When compared to Bitcoin, OneCoin had no blockchain. This meant mining was done only by the company.
It was estimated that a total of 120 billion coins would be available on the OneCoin network. Their worth was determined by the OneCoin team, who “programmed” the coin to increase from $0.56 to approximately $33.68. The only way to exchange OneCoins for any other currency was through OneCoin’s Exchange, xcoinx, an internal market place for members who had invested more than just a starter package.
Participants were also enticed with referral rewards to urge more users to join. Sounds familiar? Yup, Ponzi scheme. OneCoin’s investors came from Germany, Holland, Romania, Scotland, and even Uganda, where poor farming families had invested in it.
2) The Disappearance
The opening of a long-promised exchange that would allow OneCoin to be turned into cash kept being delayed — and investors were worried. This was to be resolved at a large gathering of European OneCoin promoters in Lisbon, Portugal, in October 2017. But when the day came, the ever punctual Ruja didn’t show up. Dr. Ignatova had vanished. FBI records presented in court documents in 2019 revealed that on 25 October 2017, just two weeks after her Lisbon no-show, she boarded a Ryanair flight from Sofia to Athens. That was the last time anyone saw or heard from Dr. Ruja Ignatova.
Following her disappearance, the law enforcers turned their attention to Ruja’s partners.
Sebastian Greenwood, her co-founder, was extradited from Thailand to the US following an operation involving the FBI in November 2018.
In November 2019, Konstantin Ignatov, Ruja’s brother pleaded guilty to money laundering and fraud charges. In his sister’s absence, Konstantin took over with the running of OneCoin. He is facing a maximum of 90 years behind bars.
OneCoin lawyer, Mark Scott, was convicted of conspiracy to commit money laundering and conspiracy to commit bank fraud. During the trial of Scott, a former partner at US legal firm Locke Lord, it was revealed that Neil Bush, the brother of former US president George W. Bush was paid $300,000 to meet with Ignatova to discuss a $60 million loan to purchase an African oil field using OneCoin cryptocurrency.
3) The fallout
Since disappearing in October 2017, Ignatova is currently in hiding. Chinese law enforcement has been able to retrieve $267.55 million while prosecuting 98 people.
In May 2019, the Samoan Independent Seventh Day Adventist Church of New Zealand was accused of colluding with OneCoin in targeting the congregation. The church denied that it knowingly participated in illegal activity.
In India, 22 people were arrested for promoting OneCoin, and 19 out of 31 bank accounts related to OneCoin were frozen. Approximately $40 million were frozen in these accounts.
While the manhunt for Ruja Ignatova continues, New Regency Television, an American entertainment company, will turn BBC’s podcast on the rise fall and disappearance of Ignatova, dubbed “the Missing Cryptoqueen” into a television drama.
Although the exact amount defrauded is unknown, OneCoin is believed to have defrauded investors of around $15 billion in total.
Has the crypto community learned its lesson? Certainly not. Every day new scams are released and investors still fail to do proper due diligence, and fall prey to it. For example, the MMM scam, another ponzi scheme that started from Russia and gained prominence in Nigeria recently, still gets people to this day. It accounts for the second-highest transaction on the Ethereum network.
Bringing to the Justice those in charge of these scams will be a good start in restoring the reputation of Bitcoin and crypto in general. Do contact authorities with information on the whereabouts of Dr. Ruja if you have spotted her anywhere.
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