DOJ Arrests Chief of OneCoin, Says It Was Multi-Billion-Dollar Pyramid Scheme

Authorities on Friday announced the arrest of one of the founders of Bulgarian cryptocurrency business OneCoin, saying It was nothing more than a pyramid scheme designed to defraud users. While the crypto scams are disturbingly common, according to the Department of Justice press release, prosecutors claim that this particular fraud is in the billions of dollars
OneCoin chief Konstantin Ignatov faces charge of conspiracy to commit wire fraud, which could carry a maximum sentence of 20 years in prison, while his older sister Ruja Ignatova is at large and faces several charges, including wire and securities fraud and money laundering. If convicted, those charges could land up to 85 years in prison. The DOJ wrote that OneCoin operated more or less than a classic pyramid scheme, with members being paid commissions to bring in new members. and grow the network:
OneCoin Ltd. operates as a multi-level marketing network through which members receive commissions for recruiting others to purchase cryptocurrency packages. This multi-level marketing structure appears to have influenced the rapid growth of the OneCoin member network. Indeed, OneCoin Ltd. has claimed to have more than 3 million members worldwide, including victims living and / or working within the Southern District of New York. OneCoin continues to operate to this day. the value of OneCoin is determined internally and not based on market supply and demand; and OneCoins are not mined using computer resources. ”(Quartz noted, the operators fooled by investors by deploying their best crypto jargon.) The DOJ alleged that between Q4 2014 and Q3 2016 alone, the scammers pulled a nearly $ 3.8 billion in transfers to OneCoin-controlled bank accounts, with "profits" or over $ 2.5 billion. Much of the illicit earning came from China. Detained at Los Angeles International Airport, Ignatova has yet to be found. Members of the pyramid scheme have been arrested and / or charged in China and India, while financial regulators have gone after their payment processors and trading network.