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OneCoin was established in 2014 and is based in the capital city of Bulgaria, Sofia. The project operates as a marketing network through which members receive commissions for attracting other potential investors to buy cryptocurrency packages. OneCoin purportedly has over three million members worldwide.
When Ignatov was asked when OneCoin members could “cash out” their coins at a meeting with investors in Las Vegas, he said “if you are here to cash out, leave this room now, because you don’t understand what this project is about.” Commenting on the charges, Manhattan U.S. Attorney Geoffrey S. Berman said:
“As alleged, these defendants 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 zeroes and ones. Investors were victimized while the defendants got rich. Our Office has a history of successfully targeting, arresting, and convicting financial fraudsters, and this case is no different.”
The investigation reportedly found that between the fourth quarter of 2014 and the third quarter of 2016 OneCoin generated 3.353 billion euros ($3.769 billion) in sales revenue and earned “profits” of 2.232 billion euros ($2.509 billion).
New York County District Attorney Cyrus R. Vance, Jr. stated that “these defendants [the Ignatovs] executed an old-school pyramid scheme on a new-school platform, compromising the integrity of New York’s financial system and defrauding investors out of billions.”
Last month, the U.S. Department of Justice charged a New York-based operator, Randall Crater, of a purported cryptocurrency payment services firm My Big Coin Pay Inc. (My Big Coin) with wire fraud and unlawful monetary transactions. The indictment states that Crater conducted four counts of wire fraud and three counts of unlawful monetary transactions, as well as misappropriated more than $6 million in investor funds for personal use.
