Head of OneCoin, a multibillion-dollar crypto scheme, arrested at LAX

08 Mar, 2019
by Joeri Cant
News
Head of OneCoin, a multibillion-dollar crypto scheme, arrested at LAX

Konstantin Ignatov, the current leader of OneCoin, was arrested at the Los Angeles International Airport, on a wire fraud conspiracy charge stemming from his role as the leader of an international pyramid scheme that involved the marketing of the fraudulent cryptocurrency 'OneCoin'.

The Manhattan U.S. Attorney's Office announced that Konstantin Ignatov, currently serving as the top leader of OneCoin Ltd, was arrested at the Los Angeles International Airport.

As a result of misrepresentations that Ignatov, his sister Ignatova, and others made about OneCoin, victims invested billions of dollars worldwide in the fraudulent cryptocurrency.

'Following his arrest, Ignatov appeared in Magistrate Court in the Central District of California, and was detained on the charge contained in the complaint.'

OneCoin has been considered a Ponzi scheme, both due to its organisational structure and because of many of the people who are central to OneCoin have previously been involved in other similar Ponzi schemes.

OneCoin's main business was selling educational material for trading, where members were able to buy educational packages ranging from 100 euros to 118,000 euros. Each package included tokens which could be assigned to mine OneCoins. OneCoin apparently was mined by servers at two sites in Bulgaria and one site in Hong Kong.

OneCoin 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 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.

Read more: Is Ethereum at $100,000 really possible?

In regards to the arrest, Manhattan U.S. Attorney Geoffrey S. Berman said that as alleged, these defendants created a multibillion-dollar ‘cryptocurrency’ company based completely on lies and deceit.

'They promised big returns and minimal risk, but, as alleged, this business was a pyramid scheme based on smoke and mirrors more than zeroes and ones. Investors were victimized while the defendants got rich. Our Office has a history of successfully targeting, arresting, and convicting financial fraudsters, and this case is no different.'

The New York County District Attorney Cyrus R. Vance, Jr. added that these defendants executed an old-school pyramid scheme on a new-school platform, compromising the integrity of New York’s financial system and defrauding investors out of billions.

'I commend U.S. Attorney Berman and my Office’s Major Economic Crimes Bureau for their globe-spanning investigative work and shared commitment to protecting our markets from sophisticated white-collar fraudsters', he said.

The FBI Assistant Director-in-Charge William Sweeney, pointed out that OneCoin was a cryptocurrency existing only in the minds of its creators and their co-conspirators.

'Unlike authentic cryptocurrencies, which maintain records of their investors’ transaction history, OneCoin had no real value. It offered investors no method of tracing their money, and it could not be used to purchase anything. In fact, the only ones who stood to benefit from its existence were its founders and co-conspirators. Whether you’re dealing with virtual currency or cold, hard cash, we urge the public to exercise due diligence with any investment.'

Read more: What does Elon Musk have to say about Bitcoin?

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Jelmer van der Dussen wrote

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