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Onecoin crypto ponzi scheme leader arrested in the US

Sanmi Adeagbo | Mar. 11, 2019
Onecoin crypto ponzi scheme leader arrested in the US

US arrests leader of Onecoin Ponzi scheme after it was accused of defrauding its victims a sum of over $4 billion.

May 13, 2019. | AtoZ Markets - The United States authorities have arrested Konstantin Ignatov who is the leader of an alleged cryptocurrency Ponzi called Onecoin. According to reports, the scheme has defrauded over 3 million victims of a huge amount of money.

Years back when the cryptocurrency industry was gaining widespread popularity, one would have expected to see a lot of scams coming along with the new industry. At a time when Bitcoin gained massively, a lot of other coins were introduced into the market. The industry was not regulated, so there were victims who fell into the traps of scam coins.

About Onecoin crypto Ponzi scheme

Onecoin was founded in 2014 by a Bulgarian businesswoman Ruja Ignatova who happened to be Konstantin's sister. The company used the familiar pyramid (multi-level marketing) scheme to sell its cryptocurrency packages. It basically promised to pay commissions to affiliate members who would convince other people to buy these packages. According to a court document, the company has sold over $3.7 billion worth of Onecoin crypto packages to over 3 million people worldwide between 2014 and 2016. In the same period, the company was said to have recorded a profit of close to $2.5 billion. According to reports by the FBI, the company rigged and inflated Onecoin price even without having a functional blockchain or any public ledger.

The FBI said further that the company's Onecoin has no real value. It could not be used to purchase anything, and the company does not keep the records of investors' transaction history. Only the founders and their teams stood to gain from it. 

Onecoin's ringleaders - Who are the culprits?

Ruja Ignatova, the founder and her younger brother Konstatin Ignatov together with their top representatives are the main culprits of this Ponzi fraud. However, Ignatova disappeared in October 2017 from the public eyes. A court investigation revealed, in an E-mail between Ignatova and a co-conspirator, her intentions to cash out and run which she referred to as 'exit strategy'. Shortly after her exit, her brother Konstantin took charge and soon became the leader up till June 2018. The court investigation also included that the FBI arrested Mark Scott, a former partner with the international law firm Locke Lord for conspiring to launder over $400 million through hedge funds in the Cayman Islands. Scott sent the majority of these funds to founders of the scheme whose names were not stated. 

If they are found guilty, the perpetrators of this scheme would spend 20 years or more in prison. Ignatov with a lone charge could face up to 20 years in prison. Same with Scott. Ignatova who faces 5-count charges could spend a maximum of 85 years in prison if she's guilty of all of them. 

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