OneCoin, the investment scheme that boasted of its own unique blockchain, will once again face justice, but this time, the crackdown is aimed at its founders, Ruzha Ignatova and her brother, Konstantin Ignatov. The two Bulgarian nationals were arrested in Los Angeles on Friday and hit with charges of wire and security fraud. OneCoin partner Mark Scott was also indicted but pleaded not guilty.
Ignatova was charged with wire and securities fraud plus conspiracy to commit wire fraud and money laundering. The founder of the scheme faces up to 20 years in prison. Ignatov has been charged with one count of conspiring to commit wire fraud for money laundering purposes.
OneCoin, which had offices on a prominent street in the Bulgarian capital, Sofia, has previously been prosecuted in Finland, India, Germany, and other countries, with crackdowns on local leaders. However, the project kept existing as it was less visible compared to other digital asset Ponzi schemes. OneCoin survived for more than a year after BitConnect and DavorCoin went bust, continuing to invite investors and reportedly earning over $3 billion during its lifespan.
There is no trading information on OneCoin, and the digital asset is not publicly exchanged on any market. According to the prosecutors, its price was determined internally while investors were misled that supply and demand set the value.
The scheme is still considered active, with prosecutors on the case claiming OneCoin has 3 million members, some of whom continue to sell participation in what is essentially a Ponzi scheme.
According to the chief prosecutor on the case, Geoffrey Berman, OneCoin created a “multibillion-dollar cryptocurrency company based completely on lies and deceit.” The prosecution has also tracked at least $1.2 billion for attempted laundering as the OneCoin founders tried to hide the origin of the funds.
OneCoin sold participation through large-scale events and social media, peddling cryptocurrency packages to newcomers and encouraging people not to cash out.