The Southern District of New York (SDNY) has charged Konstantin Ignatov, Ruja Ignatova, and Mark Scott, for wire fraud, securities fraud, and money laundering. The charges stem from the roles Ignatov, Ignatova, and Scott played in what the SDNY calls "an international pyramid scheme" which involves the marketing of cryptocurrency project OneCoin.
OneCoin's main business model is selling educational cryptocurrency trading packages to its members. Members of OneCoin receive commissions for recruiting others to purchase packages. According to the SDNY, "this multi-level marketing structure appears to have influenced rapid growth of the OneCoin member network," with OneCoin claiming to have "more than 3 million members worldwide, including victims living and/or working within the Southern District of New York."
The SDNY alleges that Ignatov, Ignatova, and other OneCoin representatives made various misrepresentations to their victims. These include claims that "the OneCoin cryptocurrency is mined using mining servers maintained and operated by the company" when in reality OneCoins are not mined using computer resources. Additionally, OneCoin claimed to use a private blockchain, but investigations "revealed that OneCoin lacks a true blockchain." Ignatov has also made repeated false claims that OneCoin was preparing for an initial public offering to "generate excitement and solicit additional investments from member victims."
The SDNY claims that as a result of these misrepresentations, "between the fourth quarter of 2014 and the third quarter of 2016 alone, OneCoin Ltd. generated €3.353 billion in sales revenue and earned “profits” of €2.232 billion." Furthermore, SDNY's investigation revealed that "Ignatova and her co-founder conceived of and built the OneCoin business fully intending to use it to defraud investors." In one email between Ignatova and her co-founder, Ignatove describered her "exit strategy" for OneCoin, with the first option listed “Take the money and run and blame someone else for this."
Ignatov was arrested March 6, 2019, at the Los Angeles International Airport. Scott was arrested in Barnstable, Massachusetts, on Sept. 5, 2018. Ignatova still "remains at large."
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