OneCoin: The Most Notorious Crypto Fraud

Dominik Olech
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We frequently talk on BlockChain24.co about fraud and hoax in the cryptocurrency industry, which still cast a shadow over the crypto world. Today’s example is still new, but some already believe it is the biggest financial scam in the entire crypto history. 

Frauds are, unfortunately, a pretty usual thing in the crypto sphere. After all, a significant part of the industry is focused on earning money, so it is a natural target for scammers of all kinds. We have already written an article concerning the methods of extorting money. An especially popular technique is an old Ponzi scheme – and today’s topic is a textbook example of it.

Teach me success

OneCoin, the main character of this story, seemed suspicious for the trained eye from the very beginning. The whole business was built around the idea of an educational network. OneCoin was this way “devoted” to raise contributors’ awareness of the modern economy and how to use it for their own benefit. The educational materials distributed to members were usually stolen from several sources. But plagiarized coaching books weren’t the most problematic aspect. 

The main content of each “educational” package was a certain amount of tokens. But they weren’t OneCoin yet! Contributor needed to assign token to mine actual OneCoins. The whole process of mining was conducted by the company itself – so it was an insult to the decentralized idea of blockchain. But the shallowness of this cryptocurrency wasn’t ending here.

To actually use the coins and exchange them to fiat money, the user had to use xCoinx – a cryptocurrency exchange run by OneCoin. Coins could be exchanged for euros, yet they were still placed on virtual wallets. To finally withdraw funds, the member needed to request it. And since the exchange has sells limits depending on which package you hold, the liquidity of assets on OneCoin was inferior.

Shady business

From the beginning, the company encountered many legal issues, since it was a classic example of multi-level marketing. Several media publications were warning against the OneCoin. Some European authorities also issued official statements about the company’s legal problems. But evident flaws didn’t stop people from falling into the scheme. 

It worked pretty well because of the firm’s simple philosophy. As Kari Wahlroos, OneCoin Europe ambassador, said during one of the recruitment events: “Do you know why I wear shades? Because the future looks so bright.” Later he added: “I am here to make you filthy rich”. And unaware people easily believed in the promise of quick money. Especially when new members were committed to bringing more users because of the promised rewards.

xCoinx exchange suspended its activity in January 2017, making it impossible for coinowners to withdraw cash. And it was just the beginning of OneCoin’s troubles. On April 23rd, 2017, Indian police arrested 18 people during a recruitment event. In January next year, Bulgarian police raided OneCoin’s office in Sofia at the request of German authorities.

Queen in exile

According to investigators, the company raised about £4 billion (over $5 billion) worldwide. It makes OneCoin one of the most effective Ponzi schemes in history. At this point in the article, there is usually a paragraph informing about the successful shutdown of the malicious business. I wish it were like that in this case too.

Despite accusations, obvious proofs, and already taken legal measures, OneCoin is still active until today. Even if the name “OneCoin” was basically burned in the industry, the company is still effectively functioning as OneLife and OneAcademy. Both services work in a very similar way: presenting themselves as “an innovative e-learning platform covering a broad range of financial topics including trading, the stock exchange, cryptocurrency, financial analysis, asset management, and more.”

The company keeps working even though its founder and CEO is missing. Ruja Ignatova, calling herself “doctor,” even if it’s hard to find any evidence of her education status, has gone dark. She disappeared after a secret US warrant was filed for her arrest in 2017. Quickly she became known as “cryptoqueen,” and BBC even made a podcast about her. Ruja’s brother, Konstantin Ignatov, replaced her on the position of CEO. However, he was arrested in March 2019 and eventually pleaded guilty for money laundering and fraud.

Never-ending story

Ignatov plea, according to British journalist Jamie Bartlett, is surprising since he was always supporting sister until now. However, it is still a great relief for deceived OneCoin contributors, since for the first time, one of the company’s authorities admits its illegal character. But even without the main figures conducting the work of the company, OneCoin survived. What’s more interesting, new facts are still coming to light.

The latest news applies to alleged connections between Ignatov siblings and Neil Bush,  brother of former American President George W. Bush. As Law360 has recently informed, the president’s younger brother received $300,000 for a meeting with Konstantin Ignatov and his sister. According to Law360, Bush was involved in buying an African oil field by Hoifu Energy, of which he was a board member. The transaction was allegedly made in OneCoin.

Ignatov was eventually sentenced to 90 years in prison. However, with his sister still missing, and OneCoin promoters continuously operating, this Ponzi Scheme remains a threat. And even if it is eventually shut down, more will come in its place. And apparently, people are eager to swallow the bait of quick and easy money.

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