OneCoin operations harm allegedly 'exceeds $4 billion'

Quick Take

  • Grablis v. OneCoin Ltd. et al.
  • Allegations include four counts of securities fraud, breach of contract, unjust enrichment, fraudulent inducement, fraudulent misrepresentation, negligent misrepresentation, conversion, and civil conspiracy
  • The Plaintiff allegedly paid $15,800 to obtain membership in the OneCoin multi-level marketing scheme, and “[a]s of the date of this filing, Plaintiff GRABALIS’ out-of-pocket investment loss at ONECOIN LTD. totals approximately $130,000.00.”
  • Allegedly, “[b]etween 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.”

Disclaimer: These summaries are provided for educational purposes only by Nelson Rosario and Stephen Palley. They are not legal advice. These are our opinions only, aren’t authorized by any past, present or future client or employer. Also we might change our minds. We contain multitudes.

As always, Rosario summaries are “NMR” and Palley summaries are “SDP".

[related id=1]Grablis v. OneCoin Ltd. et al., Case №1:19-cv-04074 (S.D. NY, filed May 7, 2019)[NMR]

Some cases have something for everyone. This newly filed class action complaint includes allegations that regular readers of the Crypto Caselaw Minute should be familiar with at this point. Those allegations include four counts of securities fraud, breach of contract, unjust enrichment, fraudulent inducement, fraudulent misrepresentation, negligent misrepresentation, conversion, and civil conspiracy. Looking over those allegations you see the common themes covered in the CCM, fraud, lying, securities violations, and so on. What you don’t see from the allegations listed above, but what allegedly occurred, and makes this case, umm, different from others, is that the OneCoin operation supposedly caused financial harm that “exceeds Four Billion Dollars ($4,000,000,000.00).” That’s a big number.

The plaintiff in this case is Christine Grablis, a resident of Murfreesboro TN, and a one time alleged member of the OneCoin network. Grablis allegedly paid $15,800 to obtain membership in the OneCoin multi-level marketing scheme, and “[a]s of the date of this filing, Plaintiff GRABALIS’ out-of-pocket investment loss at ONECOIN LTD. totals approximately $130,000.00.” Now, $130,000 is not chump change, but it isn’t as large a number as we’ve seen in other lawsuits. So, how do you go from $130k to $4,000,000,000? Well, like anything else, you gotta scale.

OneCoin was founded in 2014 in Sophia, Bulgaria, with operations in Dubai, and Belize. OneCoin “market[ed] a purported digital cryptocurrency called “OneCoin” through a global multi-level marketing (“MLM”) network of OneCoin members.” Members could purchase trader packages, which the plaintiff did, and were incentivized to get new members to join. This was allegedly the basis of a pyramid scheme setup to induce people to join whose membership fees were used to payout old members making it also a Ponzi scheme. The trader packages and other educational materials you could purchase from OneCoin were allegedly copied and pasted from free sources, such as Wikipedia. Additionally, allegedly, “an investor who purchased the educational materials and “tokens” did not directly receive OneCoins; rather, the investor had to submit his/her “tokens” for mining of OneCoins.”