The cryptocurrency ecosystem is no stranger to scams and pyramid schemes. Exciting new technology, coupled with dramatically rising prices a few years ago, helped lure people into get-rich-quick schemes that only served to part them from their hard-earned money. One of the biggest cryptocurrency scams is OneCoin, which managed to take in almost US$4 billion. Now the OneCoin saga takes another turn as the brother of the cryptocurrency’s founder has pleaded guilty to money laundering and fraud charges in the United States.
Win for Law Enforcement
OneCoin was created by Ruja Ignatova in Bulgaria in 2014. The cryptocurrency saw remarkable success, shooting up in value from 29 euro cents to a stunning 29.95 euros from late 2014 to late 2016. The entire operation took in almost $4 billion, but the problem was that the entire operation seems to be a Ponzi scheme.
Ruja Ignatov left the company in October 2017 when she disappeared. Her brother, Konstantin Ignatov, then took over the company. He was arrested in March 2019 at the Los Angeles Airport and initially charged with conspiracy to commit wire fraud. His sister was charged in absentia with securities fraud, money laundering, and wire fraud.
Court documents have revealed that Konstantin Ignatov has pleaded guilty to fraud and money laundering. His plea agreement was signed on October 4 but was only made public on November 12. His agreement ensures that Konstantin will not face any further additional criminal charges related to OneCoin, although he is still liable for any criminal tax violations.
Konstantin faces up to 90 years in prison, but such a sentence might be radically changed due to his cooperation with authorities. The court documents reveal that this testimony may “reveal activities of individuals who might use violence” against his family or him. The plea agreement hints at the possibility that he may be given a new identity and entered into the witness protection program. Ignatov is currently testifying in the trial of Mark Scott, a U.S. lawyer accused of laundering about $400 million in OneCoin funds through an Irish bank.
As for his sister, Konstantin Ignatov revealed she told him she was afraid that someone close to her was going to give her up to the FBI. She also told him she was “very tired” and had taken possession of a “big passport” before asking him to buy her plane tickets to Vienna, Austria, and then Athens. Ignatov told authorities he has not seen or heard from his sister since she disappeared.
OneCoin Under Pressure
The United States is not the only country that is taking legal action against OneCoin and its supporters. Singapore designated the project a pyramid scheme and arrested two men promoting the coin back in April. The Monetary Authority of Singapore says the organizational structure of OneCoin violates the country’s Multi-Level Marketing and Pyramid Selling (Prohibition) Act. The two men face up to five years in prison and a maximum fine of $147,000.
Chinese authorities spent two years investigating OneCoin, beginning in July 2016. Law enforcement eventually prosecuted 98 people involved in the scam and recovered $267.5 million. Prosecutors noted that the case was “complicated” and the amount of money involved as “huge” due to the scam taking place across 20 provinces in China.
OneCoin denies all the charges that the company is a fraud and pyramid scheme, stating that “OneCoin verifiably fulfills all criteria of the definition of a cryptocurrency”.
