Authorities arrested a leader of a cryptocurrency project called OneCoin on Wednesday, which prosecutors said was actually a pyramid scheme instead of a functional currency. Konstantin Ignatov was arrested on a charge of electronic fraud conspiracy, while his older sister, Ruja Ignatova, was charged with money laundering and securities and securities fraud, in a document that was not sealed yesterday. Ignatova is currently at liberty.
OneCoin, a company based in Bulgaria, was founded in 2014 and still has operations underway today, according to the indictment. The company gave users a commission if they could convince others to buy the OneCoin cryptocurrency, taking the familiar form of a multi-tiered marketing scheme. He claimed to have more than 3 million members worldwide, despite not having a functional block chain or a ledger.
Manhattan attorney Geoffrey Berman says in a government press release that OneCoin leaders created a multi-billion dollar company "based entirely on lies and deceit." In a short period between 2014 and 2016, OneCoin earned € 3,353 million (approximately $ 3.7 billion) in revenue.
Prosecutors allege that the leaders lied to investors to inflate the value of a OneCoin from half a euro ($ 0.56) to almost 30 euros ($ 33.65) as of January this year. Actually, the project leaders sent out emails saying they planned to "take the money and run and blame someone else for this."
"These defendants executed a pyramid scheme of the old school on a platform of the new school," New York County District Attorney Cyrus Vance said in a statement.
US authorities discovered in their investigation that OneCoin claimed to have a digital book to record cryptocurrency transactions, but a public one could not be verified. In 2015, Ignatova started to give the members of her project fake OneCoin tokens to sell, calling them "fake coins".
When the OneCoin members recently asked Ignatov when they could withdraw their tokens, he allegedly replied: "If you are here to retire , leave this room now, because you do not understand what this project is. "
It is known that OneCoin is potentially fraudulent in several countries, including the United Kingdom, Germany, Finland, India, China and Bulgaria, as indicated by CoinDesk . Many authorities have warned about their behavior and have even tried to stop the company's operations.
Mark Scott, another person who helped in the OneCoin project, was formally charged last summer and faces up to 20 years in prison. Ignatov also faces 20 years in prison, while Ignatova faces five separate charges, which could add up to 85 years in prison if found guilty on all charges.