There are absolutely a lot of dubious ICOs out there – more than 70% of all ICOs created and funded in 2017 and 2018 are gone, and with them, the money of the investors. The problem is that while there is always risk with investing, especially in something as speculative as an ICO, founders should bear minimum legal responsibility for the product (digital asset) they produce and subsequently sell.
OneCoin, while not an ICO, is probably the largest Ponzi scheme in the “crypto” world. The problem is that OneCoin is a marketing pyramid and is not even classified as a cryptocurrency at all. However, the founders of the project managed to lure millions of investors and defraud the global economy of around $4 billion for under four years.
Created somewhere in 2014 by the Bulgarian Ruja Ignatova, OneCoin was supposed to be selling educational material for trading. How the scheme worked is that any investor willing to participate had to buy educational packages ranging from 100 euros to 118,000 euros. 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.
However, OneCoin was never a blockchain project. Ruja Ignatova basically defrauded investors, since there was no way for them to exchange their OneCoins for any other currency. Investors were stuck with their OneCoins.
The mechanism behind the coin was simply the private determination of prices. The founders of OneCoin claimed that the coins’ prices are determined by market forces, in a similar way to Bitcoin’s price. However, none of that was true.
More interestingly, the founder of the massive Ponzi scheme is an ex-McKinsey consultant, who tried to create another “crypto project” before OneCoin, called BigCoin. The idea soon went underwater and Mrs. Ignatova started “brainstorming” ideas about a new scheme.
With internally regulated price, OneCoin is basically worthless to investors. However, the coin is worth billions to the founders. The profits coming from the roughly $4 billion in sales were around $2.2 billion.
Along with Ruja Ignatova, there were other parties involved as well. Her younger brother, Konstantin Ignatov, assumed some prominent positions within the company after Ruja disappeared in late 2017, after several jurisdictions declared OneCoin as a fraudulent scheme. Ignatov was recently arrested in Los Angeles. Along with these two, the company’s lawyer, Mark Scott was also aware of the scam. He helped the scammers launder huge amounts of money.
Ruja Ignatova orchestrated the whole thing, going from conference to conference around the world promoting her “cryptocurrency”. It is now known from internal emails that she wrote:
Take the money and run and blame someone else….
Fast forward to 2019, this is a chronological order of the most recent events that took place with OneCoin and the conspirators in the scheme:
September 2018
US lawyer Mark Scott is arrested and charged with $400 million for money laundering by OneCoin.
March 2019
Konstantin Ignatov was arrested at Los Angeles Airport at the end of his business trip to the United States and meetings with OneCoin’s locals in Las Vegas. Ruja Ignatova has been indicted and her whereabouts are unknown.