Finance:OneCoin

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Short description: Bulgarian multi-level marketing company
OneCoin logo on the door of their office building in Sofia, Bulgaria in 2016

OneCoin is a Ponzi scheme[1][2] promoted as a cryptocurrency by Bulgaria-based[3] offshore companies OneCoin Ltd (registered in Dubai) and OneLife Network Ltd (registered in Belize), both founded by Ruja Ignatova in concert with Sebastian Greenwood.[4] OneCoin is considered a Ponzi scheme due to its organisational structure and because of the previous involvement of many of those central to OneCoin in similar schemes.[5] It was described by The Times as "one of the biggest scams in history".[6]

US prosecutors have alleged the scheme brought in approximately $4 billion worldwide.[7] In China , law enforcement recovered 1.7 billion yuan (US$267.5 million) while prosecuting 98 people.[8] Ruja 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 Ruja Ignatova has not.[9] Greenwood was arrested in 2018,[10] as was Konstantin Ignatov in March 2019.[11] In November 2019, Konstantin Ignatov pleaded guilty to charges of money laundering and fraud. The total maximum sentence for the charges is 90 years in prison.[12]

Concept

According to OneCoin, its main business is selling educational material for trading. Members are able to buy educational packages ranging from 100 euros to 118,000 euros,[13] or, according to one industry blog, 225,500 euros.[14] Each package includes "tokens" which can be assigned to "mine" OneCoins. OneCoin is said to be mined by servers at two sites in Bulgaria and one site in Hong Kong. Each level (except six and seven), or package, gives new educational material, which is plagiarized from several sources.[15] However, in a typical OneCoin recruiting meeting, recruiters mainly talk about investing in cryptocurrency and the educational material is barely mentioned.[16][17]

The only way to exchange Onecoins for any other currency was OneCoin Exchange, xcoinx, an internal marketplace for members who had invested more than just a starter package. Onecoins could be exchanged for euros, which were placed in a virtual wallet from which they could be requested for wire transfer. The marketplace had daily selling limits based on which packages the seller had invested in, which greatly limited the amount of onecoins which could be exchanged.

On 1 March 2016, without notice, OneCoin issued an internal notice that the market 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".[18] On 15 March 2016, the market opened again but no visible changes had been made; most of the transactions expired as before and daily limits stayed on.

The exchange was shut down without notice in January 2017, though individuals affiliated with the scheme continue to accept funds.[19][9]

Legal issues and criticism

The office of OneCoin in Sofia, Bulgaria, in 2016

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.[20] After the warning, OneCoin ceased all activity in Bulgaria and started to use banks in foreign countries to handle wire transfers from participants.[21]

2016

In February 2016, the British newspaper Daily Mirror wrote that OneCoin / OneLife is a get-rich-quick scheme scam and a cult, calling it "virtually worthless".[22]

The company and the scheme is on the observation lists of many authorities; among them are authorities in Bulgaria, Finland,[13][23][24] Sweden,[25] Norway[26] and Latvia.[27] 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.[28]

In March 2016, the Direct Selling Association in Norway warned against OneCoin, comparing it to a pyramid scheme.[4]

In December 2016, the Italian Antitrust Authority (Autorità Garante della Concorrenza e del Mercato) "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" ("sistema di vendita piramidale vietato dalla legge"), and ordering them to cease promoting and selling OneCoin in Italy [29] On 27 February 2017, after concluding their investigation, AGCM banned all activity on OneCoin until further notice.[30]

In December 2016, the Hungarian Central Bank issued a warning that OneCoin is a pyramid scheme,[31] and in China that same year several members and investors of OneCoin were arrested and US$30.8 million worth of assets seized.[32]

2017

In March 2017, the Croatian National Bank (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.[33]

On 23 April 2017, Indian police arrested 18 people in Navi Mumbai 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.[34][35] In May, the investigation recovered Rs 24.57 crores ($3.49 million USD) in nine bank accounts. A further Rs 75 crores ($10.65 million USD) were transferred out before authorities were able to seize it.[36] Early in the month of May two more people were arrested and a further Rs 24 crores ($3.41 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.[37]

On 27 April 2017, Germany's Federal Financial Supervisory Authority (BaFin) issued cease & desist orders to Onecoin Ltd, Dubai, and OneLife Network Ltd, Belize.[38] The Authority concluded that trading in OneCoins was fraudulent "own funds" trading.[38]

On 28 April 2017, Bank of Thailand issued a warning against OneCoin, stating it was an illegal digital currency and that it should not be used in trade.[39]

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.[40]

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.[41] 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.[42][41]

On 10 July 2017, Ruja Ignatova, the CEO, was charged in India with duping investors as a part of the Indian investigation.[5]

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, 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.[43]

On 3 May 2018, the Central Bank of Samoa (CBS) banned all foreign exchange transactions related to OneCoin and OneLife.[44] The bank had earlier in March issued a warning about OneCoin.[45] CBS describes OneCoin as a very high risk pyramid scheme.

2019

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.[46]

On 24 November 2019 the BBC 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 under a false identity.[47]

2020

In 2020 the FinCEN Files showed that BNY Mellon processed $137m for entities linked to OneCoin.[citation needed]

2021

The company OneCoin, Ruja Ignatova and Gilbert Armenta have been found in default at an ongoing trial in the US.[48]

Kate Winslet plays the role of Ignatova in the movie Fake![49]

Mark S. Scott offered to sell his house from Cape Cod; the Office of Attorneys of the US agreed.[50] Ignatova has been linked to sponsoring terrorism.[50] The Kuwaiti Home Department told Saudi authorities she is a sponsor of terrorism, Saudis believed them.[50]

See also

Further reading

References

  1. ↑ Morris, David Z. (31 May 2017). "The Rise of Cryptocurrency Ponzi Schemes". The Atlantic. https://www.theatlantic.com/technology/archive/2017/05/cryptocurrency-ponzi-schemes/528624/. 
  2. ↑ "Survey: Malaysians Warm Up to Cryptocurrencies". http://www.nasdaq.com/article/survey-malaysians-warm-up-to-cryptocurrencies-bitcoin-still-on-top-cm798146. 
  3. ↑ "'Cryptoqueen' brother admits role in OneCoin fraud". BBC News. 14 November 2019. https://www.bbc.com/news/technology-50417908. 
  4. ↑ 4.0 4.1 "Vil ikke være politi". direktesalgsforbundet.no. http://www.direktesalgsforbundet.no/vil-ikke-vaere-politi/. 
  5. ↑ 5.0 5.1 "indian police label 12 million onecoin operation a clear ponzi scheme". The Indian Express. 10 July 2017. http://indianexpress.com/article/cities/mumbai/onecoin-fraud-chargesheet-says-accused-amassed-rs-75-crore-4743458. 
  6. ↑ Bartlett, Jamie (December 15, 2019). "The £4bn OneCoin scam: how crypto-queen Dr Ruja Ignatova duped ordinary people out of billions — then went missing". https://www.thetimes.co.uk/article/the-4bn-onecoin-scam-how-crypto-queen-dr-ruja-ignatova-duped-ordinary-people-out-of-billions-then-went-missing-trqpr52pq. 
  7. ↑ "US fed prosecutor tells court OneCoin is a $4 billion Ponzi scheme". https://behindmlm.com/companies/onecoin/us-fed-prosecutor-tells-court-onecoin-is-a-4-billion-ponzi-scheme/. 
  8. ↑ Yang, Yingzhi (29 May 2018). "China prosecutes 98 people, recovers US$268 million in OneCoin cryptocurrency investigation, report says". South China Morning Post. http://www.scmp.com/tech/article/2148114/china-prosecutes-98-people-recovers-us268-million-onecoin-cryptocurrency. 
  9. ↑ 9.0 9.1 Marson, James (August 27, 2020). "OneCoin took in billions. Then its leader disappeared.". FN. https://www.fnlondon.com/articles/onecoin-took-in-billions-then-its-leader-disappeared-20200827. 
  10. ↑ NGAMKHAM, WASSAYOS (8 Nov 2018). "Cops take new tack as crime goes global". Bangkok Post. https://www.bangkokpost.com/news/general/1570022/cops-take-new-tack-as-crime-goes-global. 
  11. ↑ "Manhattan U.S. Attorney Announces Charges Against Leaders Of "OneCoin," A Multibillion-Dollar Pyramid Scheme Involving The Sale Of A Fraudulent Cryptocurrency". United States Department of Justice. 8 March 2019. https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-charges-against-leaders-onecoin-multibillion-dollar. 
  12. ↑ "Cryptoqueen brother admits role in OneCoin fraud". BBC News. 14 November 2019. https://www.bbc.com/news/technology-50417908. 
  13. ↑ 13.0 13.1 YLE (2016-03-14). "Finns investing millions in new virtual currency; police keeping tabs on case". http://yle.fi/uutiset/finns_investing_millions_in_new_virtual_currency_police_keeping_tabs_on_case/8743590. 
  14. ↑ "OneCoin investment packages approach a quarter million Euros". Behind MLM. 18 October 2016. https://behindmlm.com/companies/onecoin/onecoin-investment-packages-approach-a-quarter-million-euros/. 
  15. ↑ Petteri Järvinen (2015-05-29). "OneCoin-koulutusmateriaali kopioitu kirjoista" (in fi). http://pjarvinen.blogspot.fi/2015_05_01_archive.html. 
  16. ↑ "OneCoin valtaa Aasiaa" (in fi). 2016-03-01. http://thaimaansuomalainen.com/onecoin-valtaa-aasiaa/. 
  17. ↑ Penman, Andrew (2016-02-10). "Here's why hyped-up web currency OneCoin is virtually worthless". mirror. https://www.mirror.co.uk/news/uk-news/who-wants-onecoin-millionaire-you-7346558. 
  18. ↑ "OneCoin - Uusi pyramidihuijaus? KRP: Rikosta voidaan arvioida luotettavasti vasta myöhemmin". 2016-03-02. http://murobbs.muropaketti.com/posts/1716953707/. 
  19. ↑ "OneLife suspend OneCoin withdrawals, affiliates can't cash out". 15 January 2017. http://behindmlm.com/companies/onecoin/onelife-suspend-onecoin-withdrawls-affiliates-cant-cash-out/. 
  20. ↑ FSC (2015-09-30). "СЪОБЩЕНИЕ – OneCoin" (in bg). http://www.fsc.bg/en/news/saobshtenie-onecoin-7727.html. 
  21. ↑ "OneCoin lose last bank account, unable to accept wires". http://behindmlm.com/companies/onecoin/onecoin-lose-last-bank-account-unable-to-accept-wires/. 
  22. ↑ "Who wants to be a OneCoin millionaire? YOU don't - here's why hyped-up web currency is virtually worthless". https://www.mirror.co.uk/news/uk-news/who-wants-onecoin-millionaire-you-7346558/. 
  23. ↑ Poliisi (2015-04-11). "KRP ON SELVITTÄNYT ONECOIN-VIRTUAALIRAHAA" (in fi). https://www.poliisi.fi/keskusrikospoliisi/tiedotteet/1/0/krp_on_selvittanyt_onecoin-virtuaalirahaa_41044. 
  24. ↑ Helsingin Sanomat (2015-11-04). "Krp ei aloita tutkintaa Onecoin-valuutasta – kehottaa silti erityiseen varovaisuuteen" (in fi). http://www.hs.fi/talous/a1446613276082. 
  25. ↑ Lotteri Inspektionen (2016-01-27). "OneCoins verksamhet polisanmält för misstänkt brott mot lotterilagen" (in sv). http://www.lotteriinspektionen.se/sv/Press/Nyheter/OneCoins-verksamhet-polisanmalt-for-misstankt-brott-mot-lotterilagen/. 
  26. ↑ direktesalgsforbundet.no (2016-03-03). "Vil ikke være politi" (in NO). http://www.direktesalgsforbundet.no/vil-ikke-vaere-politi. 
  27. ↑ "FKTK brīdina par OneCoin sniegtajiem pakalpojumiem" (in lv). 2016-03-11. http://www.fktk.lv/lv/klientu-aizsardziba/bridinajumi-par-nelicencetiem/5659-fktk-bridina-par-onecoin-sniegtajiem-pakalpojumiem.html/. 
  28. ↑ "Manhattan U.S. Attorney Announces Charges Against Leaders Of "OneCoin," A Multibillion-Dollar Pyramid Scheme Involving The Sale Of A Fraudulent Cryptocurrency". U.S. Attorney's Office, Southern District of New York. 8 March 2019. https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-charges-against-leaders-onecoin-multibillion-dollar. 
  29. ↑ "PS10550 - Vendite piramidali: sospesa in via cautelare la promozione della criptomoneta OneCoin". http://www.agcm.it/index.php?option=com_content&view=article&id=8516:ps10550-vendite-piramidali-sospesa-in-via-cautelare-la-promozione-della-criptomoneta-onecoin&catid=8:comunicati-stampa&Itemid=54. 
  30. ↑ "PS10550 - Vendite piramidali: Antitrust sospende la promozione della criptomoneta OneCoin da parte di One Life". http://www.agcm.it/stampa/comunicati/8620-ps10550-vendite-piramidali-sospesa-la-promozione-della-criptomoneta-onecoin-da-parte-di-one-life.html. 
  31. ↑ "Fokozott kockázatot hordoznak a világhálón elérhető virtuális fizetőeszközök (in Hungarian)". https://www.mnb.hu/sajtoszoba/sajtokozlemenyek/2016-evi-sajtokozlemenyek/fokozott-kockazatot-hordoznak-a-vilaghalon-elerheto-virtualis-fizetoeszkozok. 
  32. ↑ behindmlm.com (2016-04-27). "Chinese authorities investigating OneCoin, investors arrested". http://behindmlm.com/companies/onecoin/chinese-authorities-investigating-onecoin-investors-arrested. 
  33. ↑ "OneCoin product carries many risks". hnb.hr (Press release). Croatian National Bank. 2017-03-07. Retrieved 2017-09-25.
  34. ↑ The Hindu (2017-04-25). "18 held for organising Ponzi scheme seminar". The Hindu. http://www.thehindu.com/news/cities/mumbai/18-held-for-organising-ponzi-scheme-seminar/article18202122.ece. 
  35. ↑ The Afternoon (2017-04-25). "Raid on OneCoin, brings out lakhs of coins". http://afternoondc.in/city-news/raid-on-onecoin-brings-out-lakhs-of-coins/article_193336. 
  36. ↑ "OneCoin fraud: Cops recover Rs 24 crore from 9 banks". Times of India. 2017-05-13. http://m.timesofindia.com/city/mumbai/onecoin-fraud-cops-recover-rs-24cr-from-9-banks/articleshow/58651788.cms. 
  37. ↑ The Hindu (2017-05-18). "2 more held in OneCoin scam". The Hindu. http://www.thehindu.com/news/cities/mumbai/2-more-held-in-onecoin-scam/article18475750.ece. 
  38. ↑ 38.0 38.1 "Onecoin Ltd (Dubai), OneLife Network Ltd (Belize) und One Network Services Ltd (Sofia/Bulgaria): BaFin issues cease and desist orders holding the companies to stop own funds trading in "OneCoins" in Germany". Bundesanstalt für Finanzdienstleistungsaufsicht. https://www.bafin.de/dok/9207438. 
  39. ↑ Bangkok Post (2017-04-28). "BoT warns public about OneCoin currency". http://www.bangkokpost.com/business/finance/1239954/bot-warns-public-about-onecoin-currency. 
  40. ↑ IFSC (2017-05-29). "One Life Network Limited". http://www.ifsc.gov.bz/one-life-network-limited/. 
  41. ↑ 41.0 41.1 Behind MLM (2017-06-20). "OneCoin Vietnamese regulatory document forged, govt says". http://behindmlm.com/companies/onecoin/onecoin-vietnamese-regulatory-document-forged-govt-says/. 
  42. ↑ Báo Đấu thầu (2017-06-20). "Cảnh báo việc giả mạo văn bản của Bộ Kế hoạch và Đầu tư, Cục Quản lý đấu thầu" (in vi). http://baodauthau.vn/phap-luat/canh-bao-viec-gia-mao-van-ban-cua-bo-ke-hoach-va-dau-tu-cuc-quan-ly-dau-thau-43468.html. 
  43. ↑ The Sofia Globe (19 January 2018). "Bulgarian special prosecutors join in anti-money laundering operation against OneCoin". https://sofiaglobe.com/2018/01/19/bulgarian-special-prosecutors-join-in-anti-money-laundering-operation-against-onecoin/. 
  44. ↑ Central Bank of Samoa (2018-03-21). "CENTRAL BANK OF SAMOA BLOCKS ALL ONECOIN CRYPTOCURRENCY TRANSACTIONS.". https://www.cbs.gov.ws/index.php/dmsdocument/6000. 
  45. ↑ Central Bank of Samoa (2018-03-21). "Warning on ONECOIN Cryotocurrency". https://www.cbs.gov.ws/index.php/media/latest-news/central-bank-of-samoa-issues-warning-on-onecoin-cryptocurrency-/. 
  46. ↑ "OneCoin lawyer found guilty in 'crypto-scam'". BBC News. 21 November 2019. https://www.bbc.com/news/technology-50509299. 
  47. ↑ "Cryptoqueen: How this woman scammed the world, then vanished". BBC News. 24 November 2019. https://www.bbc.com/news/stories-50435014. 
  48. ↑ Crawley, Jamie (18 May 2021). "$4B Ponzi Scheme OneCoin and 'CryptoQueen' Leader Found in Default in US Lawsuit". https://finance.yahoo.com/news/4b-ponzi-scheme-onecoin-cryptoqueen-093250400.html. 
  49. ↑ Khatri, Yogita (12 October 2020). "Oscar-winner Kate Winslet to star in 'Fake!' - a movie about crypto Ponzi scheme OneCoin". https://finance.yahoo.com/news/oscar-winner-kate-winslet-star-114027797.html. 
  50. ↑ 50.0 50.1 50.2 Lee, Matthew Russell (20 August 2011). "As New OneCoin Lawsuit Cites Madani, Scott Wants To Sell Cape Cod Home & OUSA Agrees". http://www.innercitypress.com/sdnypress32onecoinschneidericp072621.html. 




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