![OneCoin logo on their office door in Sofia, Bulgaria](https://upload.wikimedia.org/wikipedia/commons/b/b1/OneCoin_logo_on_their_office_door_in_Sofia%2C_Bulgaria.jpg)
OneCoin is a fraudulent cryptocurrency scheme
conducted by
offshore companies
The term "offshore company" or “offshore corporation” is used in at least two distinct and different ways. An offshore company may be a reference to:
* a company, group or sometimes a division thereof, which engages in offshoring business pro ...
OneCoin Ltd, based in
Bulgaria
Bulgaria (; bg, България, Bǎlgariya), officially the Republic of Bulgaria,, ) is a country in Southeast Europe. It is situated on the eastern flank of the Balkans, and is bordered by Romania to the north, Serbia and North Macedon ...
and registered in
Dubai
Dubai (, ; ar, دبي, translit=Dubayy, , ) is the most populous city in the United Arab Emirates (UAE) and the capital of the Emirate of Dubai, the most populated of the 7 emirates of the United Arab Emirates.The Government and Politics of ...
, and OneLife Network Ltd (registered in
Belize
Belize (; bzj, Bileez) is a Caribbean and Central American country on the northeastern coast of Central America. It is bordered by Mexico to the north, the Caribbean Sea to the east, and Guatemala to the west and south. It also shares a wate ...
), both founded by
Ruja Ignatova
Ruja Plamenova Ignatova ( bg, Ружа Пламенова Игнатова, Ruža Plamenova Ignatova; born 30 May 1980) is a Bulgarian-born German citizen and convicted fraudster. She is best known as the founder of a fraudulent cryptocurrenc ...
in concert with Sebastian Greenwood.
OneCoin is considered a
Ponzi scheme
A Ponzi scheme (, ) is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. Named after Italian businessman Charles Ponzi, the scheme leads victims to believe that profits are comin ...
due to its organisational structure of paying early investors using money obtained from newer ones. It was also a
pyramid scheme
A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly im ...
due to the recruiting of investors without providing any actual product. The company secretly conducted database entry scam simulating transactions not registered by an actual blockchain, and with no mining behind the apparent cryptocurrency release and circulation. Many of those characters central to OneCoin had been previously involved in similar and different other schemes and business malpractices separate from each other.
OneCoin was described by ''
The Times
''The Times'' is a British daily national newspaper based in London. It began in 1785 under the title ''The Daily Universal Register'', adopting its current name on 1 January 1788. ''The Times'' and its sister paper ''The Sunday Times'' (fou ...
'' as "one of the biggest scams in history".
US prosecutors have alleged the scheme brought in approximately $4 billion worldwide. In
China
China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
, law enforcement recovered 1.7 billion yuan (US$267.5 million) while prosecuting 98 people.
Ignatova disappeared in 2017 near the time a secret US warrant was filed for her arrest and her brother, Konstantin Ignatov, took her position. Most of the leaders have now disappeared or been arrested, though Ignatova has escaped arrest.
Greenwood was arrested in 2018, as was Konstantin Ignatov in March 2019.
In November 2019, Ignatov pleaded guilty to charges of money laundering and fraud. The total maximum sentence for the charges is 90 years in prison.
Concept
OneCoin was launched in late 2014. It was not a decentralized
cryptocurrency
A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It i ...
but rather a centralized
currency
A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins.
A more general def ...
hosted on OneCoin Ltd's
server
Server may refer to:
Computing
*Server (computing), a computer program or a device that provides functionality for other programs or devices, called clients
Role
* Waiting staff, those who work at a restaurant or a bar attending customers and su ...
s.
According to OneCoin, its main business was selling educational material for
cryptocurrency trading: investors could buy "educational packages" costing anywhere from 100 euros to 118,000 euros,
or—according to one industry blog—225,500 euros. According to a
suit
A suit, lounge suit, or business suit is a set of clothes comprising a suit jacket and trousers of identical textiles worn with a collared dress shirt, necktie, and dress shoes. A skirt suit is similar, but with a matching skirt instead of tr ...
filed by former investors, much of the content in those packages was plagiarized from various free sources, including
Wikipedia
Wikipedia is a multilingual free online encyclopedia written and maintained by a community of volunteers, known as Wikipedians, through open collaboration and using a wiki-based editing system. Wikipedia is the largest and most-read refer ...
. Investors also received "tokens" that could be assigned to
mine
Mine, mines, miners or mining may refer to:
Extraction or digging
* Miner, a person engaged in mining or digging
*Mining, extraction of mineral resources from the ground through a mine
Grammar
*Mine, a first-person English possessive pronoun
...
OneCoins. Mining was said to be taking place at two sites in Bulgaria and one in Hong Kong.
In typical OneCoin
recruiting meetings, recruiters would focus on cryptocurrency investment, and the "educational material" was barely mentioned.
The only way to
exchange
Exchange may refer to:
Physics
*Gas exchange is the movement of oxygen and carbon dioxide molecules from a region of higher concentration to a region of lower concentration. Places United States
* Exchange, Indiana, an unincorporated community
* ...
OneCoins for other currencies was the ''OneCoin Exchange'' ("xcoinx"), an internal marketplace for members who had invested more than a set amount. OneCoins could be exchanged for euros, which were placed in a "virtual wallet", from which they could request a
wire transfer
Wire transfer, bank transfer, or credit transfer, is a method of electronic funds transfer from one person or entity to another. A wire transfer can be made from one bank account to another bank account, or through a transfer of cash at a cash ...
. The marketplace had daily selling limits based on which package the seller had invested in, greatly limiting the amount of OneCoins which could be exchanged.
On 1 March 2016, without notice, OneCoin issued an internal notice that the marketplace would be closed for two weeks for maintenance, explaining that this was necessary due to the "high number of miners" and for "better integration with
blockchain
A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, a ...
". On 15 March 2016, the market re-opened. It was shut down again without notice in January 2017, though individuals affiliated with the company continued to accept funds.
[
]
Legal issues and criticism
2015
On 30 September 2015, 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
In February 2016, the British newspaper ''Daily Mirror
The ''Daily Mirror'' is a British national daily tabloid. Founded in 1903, it is owned by parent company Reach plc. From 1985 to 1987, and from 1997 to 2002, the title on its masthead was simply ''The Mirror''. It had an average daily print ...
'' wrote that OneCoin / OneLife is a get-rich-quick scheme scam and a cult, calling it "virtually worthless".
The company and the scheme is on the observation lists of many authorities; among them are authorities in Bulgaria, Finland, Sweden, Norway and Latvia. Authorities in many countries have warned of potential risks involved in businesses like OneCoin and undertaken prosecutions against persons linked to OneCoin, including CEO Ruja Ignatova and her brother Konstantin Ignatov.[
In March 2016, the Direct Selling Association in Norway warned against OneCoin, comparing it to a ]pyramid scheme
A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. As recruiting multiplies, recruiting becomes quickly im ...
.
In December 2016, the Italian Antitrust Authority () "adopted an interim injunction against the company One Network Services Ltd., active in the promotion and dissemination of cryptocurrency OneCoin", and its representatives in Italy, describing their activities as an "illegal pyramid sales system" (), and ordering them to cease promoting and selling OneCoin in Italy On 27 February 2017, after concluding their investigation, AGCM banned all activity on OneCoin until further notice.
In December 2016, the Hungarian Central Bank issued a warning that OneCoin is a pyramid scheme, and in China that same year several members and investors of OneCoin were arrested and US$30.8 million worth of assets seized.
2017
In March 2017, the Croatian National Bank
The Croatian National Bank ( hr, Hrvatska narodna banka or HNB; ) is the central bank of the Republic of Croatia.
HNB was established by the Constitution of Croatia which was passed by the Parliament of Croatia on 21 December 1990. Its main res ...
(HNB) advised the public to "exercise a high degree of caution" in decisions involving OneCoin, noted that OneCoin operations are not supervised by the HNB, and warned that possible losses will be fully borne by the investors.
On 23 April 2017, Indian police arrested 18 people in Navi Mumbai
Navi Mumbai (), is a planned city situated on the west coast of the Indian subcontinent, located in the Konkan division of Maharashtra state, on the mainland of India.
Navi Mumbai is part of the Mumbai Metropolitan Region (MMR). The city is ...
for organizing a OneCoin recruitment event. The police attended the event undercover to judge the accusations before they decided to act. Further investigation was begun with the intent of revealing the higher levels of the pyramid. In May, the investigation recovered Rs 24.57 crore
A crore (; abbreviated cr) denotes ten million (10,000,000 or 107 in scientific notation) and is equal to 100 lakh in the Indian numbering system. It is written as 1,00,00,000 with the local 2,2,3 style of digit group separators (one lakh is e ...
s ($ million USD) in nine bank accounts. A further Rs 75 crores ($ million USD) were transferred out before authorities were able to seize it. Early in the month of May, two more people were arrested and a further Rs 24 crores ($ million USD) were seized from bank accounts. A special investigation team of 15 individuals including 4 assistant police inspectors was formed under Senior Police Inspector Shivaji Awate with the stated goal of following the money trail and possibly lead to further arrests.
On 27 April 2017, Germany's Federal Financial Supervisory Authority
The Federal Financial Supervisory Authority (german: Bundesanstalt für Finanzdienstleistungsaufsicht, Bundesanstalt für Finanzdienstleistungsaufsicht) better known by its abbreviation BaFin is the financial regulatory authority for Germany. It ...
(BaFin) issued cease and desist
A cease and desist letter is a document sent to an individual or business to stop alleged illegal activity. The phrase "cease and desist" is a legal doublet, made up of two near-synonyms. The letter may warn that, if the recipient does not dis ...
orders to Onecoin Ltd, Dubai, and OneLife Network Ltd, Belize. The Authority concluded that trading in OneCoins was fraudulent "own funds" trading.
On 28 April 2017, Bank of Thailand
The Bank of Thailand (BOT) ( Abrv: ธปท.; th, ธนาคารแห่งประเทศไทย, ) is the central bank of Thailand.
History
The Bank of Thailand (BOT) was first set up as the Thai National Banking Bureau. The Bank ...
issued a warning against OneCoin, stating it was an illegal digital currency and that it should not be used in trade.
On 29 May 2017, International Financial Services Commission of Belize (IFSC) issued a warning about OneLife Network Ltd conducting trading business without license or permission from ''IFSC'' or any other authority. OneLife Network Ltd was directed to cease and desist from carrying on with the illegal trading business.
On 16 June 2017, the CEO of OneCoin Ltd. claimed OneCoin was licensed by the Vietnamese government, that it was legally permissible to use them as a digital currency and that it was the first cryptocurrency in Asia officially licensed by any government. On 20 June 2017, Vietnam's Ministry of Planning and Investment (MPI) issued a statement that the document which OneCoin used as proof was forged. They stated that the document was against the MPI regulations and that the person who supposedly signed the document was not in the position claimed by the document at the time when the document was created. MPI warned individuals and enterprises to be vigilant if they encounter the document during business.
On 10 July 2017, Ruja Ignatova, the CEO, was charged in India with duping investors as a part of the Indian investigation.
2018
On 17 and 18 January 2018, Bulgarian police raided OneCoin's office in Sofia at the request of the prosecutor's office in Bielefeld
Bielefeld () is a city in the Ostwestfalen-Lippe Region in the north-east of North Rhine-Westphalia, Germany. With a population of 341,755, it is also the most populous city in the administrative region (''Regierungsbezirk'') of Detmold and the ...
, 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. OneCoin's servers and other material evidence were seized.
On 3 May 2018, the Central Bank of Samoa
The Central Bank of Samoa ( sm, Faletupe Tutotonu o Samoa), situated in the capital Apia beside the main government buildings, issues the Samoan currency, the Samoan tālā as well as regulates and manages the exchange rate with foreign currenci ...
(CBS) banned all foreign exchange transactions related to OneCoin and OneLife. The bank had earlier in March issued a warning about OneCoin. CBS describes OneCoin as a very-high-risk pyramid scheme.
2019
In 2019 (plea deal, 4 October; made public, 12 November), Ruja Ignatova's brother Konstantin Ignatov pleaded guilty to fraud and money laundering in connection with the scheme.
On 21 November 2019 the New York Federal Court found lawyer Mark Scott guilty of money laundering and bank fraud for his role in routing US$400m out of the US.
On 24 November 2019 the BBC #REDIRECT BBC #REDIRECT BBC #REDIRECT BBC
Here i going to introduce about the best teacher of my life b BALAJI sir. He is the precious gift that I got befor 2yrs . How has helped and thought all the concept and made my success in the 10th board ex ...
published a detailed investigation of OneCoin and Ignatova titled "Cryptoqueen: How this woman scammed the world, then vanished". The reporters believe that Ignatova resides in Frankfurt
Frankfurt, officially Frankfurt am Main (; Hessian: , "Frank ford on the Main"), is the most populous city in the German state of Hesse. Its 791,000 inhabitants as of 2022 make it the fifth-most populous city in Germany. Located on its na ...
under a false identity
Identity theft occurs when someone uses another person's personal identifying information, like their name, identifying number, or credit card number, without their permission, to commit fraud or other crimes. The term ''identity theft'' was co ...
.
2020
In 2020 the FinCEN Files
The FinCEN Files are documents from the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN), that have been leaked to ''BuzzFeed News'' and the International Consortium of Investigative Journalists (ICIJ), and published globally on 20 S ...
showed that BNY Mellon
The Bank of New York Mellon Corporation, commonly known as BNY Mellon, is an American investment banking services holding company headquartered in New York City. BNY Mellon was formed from the merger of The Bank of New York and the Mellon Finan ...
flagged to FinCEN $137m of transactions related to OneCoin.
2021
The company OneCoin, Ruja Ignatova and Gilbert Armenta have been found in default at an ongoing trial in the US.
2022
In May 2022, Europol added Ignatova to their "Europe's Most Wanted" list, offering a €5,000 reward for information leading to her arrest. On June 30, the Federal Bureau of Investigation
The Federal Bureau of Investigation (FBI) is the domestic intelligence and security service of the United States and its principal federal law enforcement agency. Operating under the jurisdiction of the United States Department of Justice, ...
added Ignatova to the FBI Ten Most Wanted Fugitives
The FBI Ten Most Wanted Fugitives is a most wanted list maintained by the United States's Federal Bureau of Investigation (FBI). The list arose from a conversation held in late 1949 between J. Edgar Hoover, Director of the FBI, and William Kin ...
list, offering a reward of up to $100,000 for information leading to her arrest.
2023
In March 2023, OneCoin's former legal and compliance officer Irina Dilkinska was caught and extradited from Bulgaria to the United States.
See also
* Bitconnect
Bitconnect (also spelled BitConnect and KimConnect; stylized ''bitconnect'', ticker code BCC) was an open-source cryptocurrency in 2016–2018 that was connected with a high-yield investment program, a type of Ponzi scheme. After the platform a ...
* PlusToken
PlusToken was a ponzi scheme that operated worldwide but mainly had investors in China and South Korea.
History
PlusToken started in April 2018. It offered monthly payments to users of its cryptocurrency wallet. There was also a token called ' ...
* USI Tech
USI Tech Limited (also known as United Software Intelligence, or stylised as USI-TECH) was a Dubai-based cryptocurrency and forex platform trading provider, suspected to be a high-yield investment program and a Ponzi scheme. Prior to going offl ...
References
Further reading
''The Missing Cryptoqueen.''
Podcast, BBC, since 2019.
*
External link
{{Commonscatinline
Cryptocurrency projects
Crypto Ponzi schemes
Cryptocurrency scams