One of the alleged organizers of the notorious OneCoin financial pyramid, Konstantin Ignatov, was arrested on March 6 at Los Angeles International Airport on charges brought against him by the prosecutor's office of the Southern District of New York (SDNY). This is stated in the press release of the department.
In addition to Konstantin Ignatov, charges of fraud using electronic means of communication, securities fraud and money laundering were made by another organizer of OneCoin, his sister Ruzhe Ignatova, who is still at large. In addition, in September last year, another project leader Mark Scott was arrested.
Konstantin Ignatov
The main business model of OneCoin is selling educational cryptocurrency trading packages. Project participants receive referral commissions for attracting new individuals and selling packages.
According to SDNY, “this multi-level marketing system (MLM) has contributed to the rapid growth of the OneCoin network. According to the project itself, its user base has more than 3 million, among which were people living or working in the Southern District of New York
SDNY also insists that Ignatov, Ignatova and other representatives of the project provided false information to their victims. Such misleading information includes claims that OneCoin cryptocurrency is mined with the help of servers belonging to the company, although in reality there is no mining.
Also, representatives of the project say that OneCoin is based on a private blockchain, but an investigation revealed that there is no blockchain either. In addition, emphasize in SDNY, Konstantin Ignatov made false claims that OneCoin is preparing for an IPO, which, according to the procurators, should "create a stir and attract additional investment from the victims."
Stressing that the charges have not yet been confirmed by the court, prosecutor Jeffrey Berman nevertheless notes that the defendants created a multibillion-dollar "cryptocurrency company" built entirely on lies and deception.
“They promised a big profit and minimal risk, but, as it is supposed, their business was a pyramid behind which there was more selling than zeros and ones. Investors became victims, while the defendants grew richer, ”he says.
According to SDNY, as a result of these fraudulent activities, only in the period between the fourth quarter of 2014 and the third quarter of 2016, OneCoin Ltd received EUR 3,353 billion in sales revenue, making a profit of EUR 2.232 billion.
In addition, during the investigation it was established that Ignatova and her business partner were building an enterprise, intending in advance to deceive investors. In particular, the procurator mentions one of Ignatova’s letters in which she described the “exit strategy” of OneCoin. The first option there was a scenario in which the organizers are hiding with money, putting the blame for their loss on other people.
Recall that in September 2016, the Financial Conduct Authority in the UK financial markets issued an official warning that they consider OneCoin a fraudulent scheme using network marketing. Similar statements were made by other regulators around the world, including the Belgian Financial Services and Markets Service, the Bank of Hungary, the Bulgarian Financial Control Commission, and law enforcement agencies in Sweden and Latvia.
In April 2017, the Federal Financial Supervision Authority of Germany (BaFin) blocked the accounts of OneCoin-related payment service IMS International Marketing Services GmbH, and later in the same year, the Indian Police put forward fraud charges against Ruzha Ignatova.
In addition, in January 2018, Bulgarian law enforcement agencies searched the offices of OneCoin and 14 other related firms accused of creating a “centralized cryptocurrency pyramid”. As a result of the raid, servers, documents and other evidence were confiscated. Also, law enforcement officers questioned about 50 people, but no arrests followed.
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