US Federal agents arrested Konstantin Ignatov, the top leader of an international pyramid scheme that stole billions from investors through the marketing of a fraudulent cryptocurrency called OneCoin.
Konstantin Ignatov was arrested on wire fraud charges at Los Angeles International Airport, the U.S. Attorney’s Office in New York said.
Ignatov and his sister Ruja Ignatova – the founder and original leader of OneCoin – were indicted with charges of wire fraud, securities fraud, and money laundering offenses. Ruja Ignatova remains at large.
The U.S. Attorney for the Southern District of New York Geoffrey S. Berman said the siblings created a multibillion-dollar “cryptocurrency” company based completely on lies and deceit. “They promised big returns and minimal risk, but, as alleged, this business was a pyramid scheme based on smoke and mirrors more than zeros and ones. Investors were victimized while the defendants got rich, he added.
New York County District Attorney Cyrus R. Vance, Jr. accused them of compromising the integrity of New York’s financial system and defrauding investors in billions.
OneCoin Ltd. was co-founded in 2014 by Ignatova in Bulgarian capital Sofia.
She served as the top leader of the company until her disappearance in October 2017. Ignatov rose to OneCoin’s top leadership position by mid-2018.
OneCoin Ltd. operates as a multi-level marketing network through which members receive commissions for recruiting others to purchase cryptocurrency packages. The OneCoin member network had such a rapid growth that it claimed to have more than 3 million members worldwide, including victims in New York. OneCoin continues to operate to this day, U.S. prosecutors say.
Victims sent funds online to One Coin-controlled bank accounts to purchase OneCoin packages. Investigation shows that, between the fourth quarter of 2014 and the third quarter of 2016 alone, OneCoin Ltd. generated EUR3.353 billion ($3.783 billion) in sales revenue and earned “profits” of EUR2.232 billion ($2.517 billion).
The promoters of the crypto currency claimed that the value of a OneCoin has steadily grown from EUR0.50 ($0.56) to approximately EUR29.95 (33.78) per coin, as of January 2019.
OneCoin Ltd. has claimed to have a private “blockchain,” or a digital ledger identifying OneCoins and recording historical transactions, which was found to be false on investigation.
The investigation has revealed that the co-founders had maintained an “exit strategy” to defraud the investors. The first option that Ignatova listed in one email she sent to her brother was, “Take the money and run and blame someone else for this . . . .”
IGNATOVA, 38, of Sofia, Bulgaria, is charged with one count each of wire fraud, conspiracy to commit wire fraud, securities fraud, and conspiracy to commit money laundering, each of which carries a maximum sentence of 20 years sentence, and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison. IGNATOVA remains at large.
IGNATOV, 33, of Sofia, Bulgaria, is charged by Complaint with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.
SCOTT, 50, of Coral Gables, Florida, is charged by Indictment with one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.