The biggest Ponzi scheme ever.
Onecoin scam is accused of defrauding users of between four and $15 billion.
How did they do it?
Who is behind Onecoin and what happened in the scammers?
On today's Coinmarketcap episode, we break down Onecoin scam and how it operated.
Make sure to check the timestamps
down below to easily navigate this video and let's just dove right in.
It's the summer of 2016, and imagine yourself among
90,000 cheering fans in London's packed Wembley Stadium.
But you're not there to cheer for a team in a sporting event
or sing along a megastar as lyrics at a concert.
You were attending the event
of Dr. Ruja Ignatova, the CEO of Onecoin, the world's
second largest cryptocurrency by market capitalization. Hey.
It is really a pleasure for me to be here.
One and a half years after we launched our cryptocurrency
Onecoin, I think today we spoke a lot about the network,
the vision for the network, how big we want to be.
But as always, I want us to remember what this network is about.
This network was created to become and
to fuel the growth of Onecoin, which I strongly
believe will be the number one cryptocurrency worldwide.
Does this sound like a good investment opportunity to you?
It did to millions of people.
This is the astounding story of the biggest crypto scam in history.
The one coin Ponzi scheme.
Probably the most influential crypto scam to date.
So what was the one coin scam?
When Dr. Ruja Ignatova stepped on the stage in the Wembley Stadium in June of 2016,
OneCoin already had been on the market for more than 18 months.
Founded in late 2014, the OneCoin promo materials positioned itself
as the next big cryptocurrency and a better Bitcoin.
OneCoin indeed became big.
At the time of Ms.Ignatova's appearance in Wembley, its market
capitalization was more than 50% of that of Bitcoin.
However, it was not a better Bitcoin, but a gigantic Ponzi sceme hidden
behind some multilevel marketing or MLM technique.
OneCoin promised all the buzz words that cryptocurrencies back then
and still today throw around to gain credibility.
Safe transactions, easy to use, cheap and time saving buyers
could mine one coins,
which would eventually hit the market and revolutionize global payment.
In reality, though, OneCoin was never worth anything.
The supposed blockchain behind the coins never existed.
And more on that later.
The coins users mined could never be traded outside of its website.
OneCoin made money selling educational materials
and using its cryptocurrency as a marketing vehicle.
Ms. Ignatova stressed the importance of education herself at Wembley.
OneCoin for me always starts with education.
You see the new launched website, The One Academy.
Why is education so important for us?
Some of you have children, I guess.
So at one point of time, these children born to drive a car.
Will you let your child drive a car without a driver's license?
And we will get to the details of how OneCoin scammed its users a bit later.
It's safe to say that it worked incredibly well.
The OneCoin scam is accused of defrauding users of between $4 and $15 billion.
However, OneCoin was accused
of being a MLM Ponzi even before it officially crashed.
In 2015 Cointelegraph wrote:
The amount of evidence
contributing to OneCoin's status as a pyramid scheme is considerable.
Its directors have previously been involved in other known scam operations.
Its resources contain no verifiable evidence for any of its business claims
and documentation uploaded to support claims
often conflicts with the claims themselves.
One coin scam became so big that several central banks warned against
investing in it, such as the Croatian National Bank in 2017
and the central banks of Latvia, Sweden and Norway in 2016.
In 2017 Germany's federal financial supervisory authority issued cease and desist orders
to OneCoin. The same year Ruja Ignatova disappeared.
The Bulgarian police eventually
raided one Queens headquarters in Sofia, Bulgaria, in January of 2018.
Miss Ignatova's co-founder Sebastian Greenwood and her brother Konstantin
Ignatova were arrested in 2018 and 2019 respectively.
OneCoin ceased to exist in 2019, although lawsuits
and investigations still continue throughout this day.
But one coin's pivotal founder,
Dr.Ruja Ignatova, has been lost without a trace for more than four years.
Who is she and what happened to her?
Born in May of 1980 in Bulgaria, her family emigrated to Germany
when Ruja was ten years old.
Even at a young age, she seemed to have a knack for the extravagant and luxurious.
Her former classmates say that Ruja never came to school without red
lipstick and her nails done. Ignatova graduated with a Ph.D.
in international law from the University of Konstanz in 2006.
According to the BBC,
Ms. ignatova ex-husband was German and a lawyer for the Linklaters, in
a multinational law firm headquartered in London.
The two even had a daughter together in late 2016, but Ignatova must have had
bigger plans for her future than a secure upper middle class lifestyle in Germany.
After an alleged stint at McKinsey in Bulgaria,
she saved a German machinery company in 2012 and then was
at least the side of the story presented in her resume.
But after saving the company from bankruptcy, and reselling it,
the new owners
had to file bankruptcy again as Ignatova and her father had plundered
the company for its asset.
Both were convicted of fraud and were given a suspended prison sentence in 2014.
Ruja strike scammers gold with her launch of OneCoin
alongside the other key personas in this story.
Sebastian Greenwood and her brother Konstantin Ignatov.
Ignatova new Greenwood from her trial scam, Bitcoin,
which was sort of an alpha version of the Onecoin scam.
Many of the schemes
and scam dynamics used in Bitcoin were later recycled for OneCoin.
Mr. Greenwood was a seasoned scammer.
According to Cointelegraph, he had launched a pyramid scheme
hiding behind a MLM practice called Unaico before Onecoin,
even though Greenwood features in all the summaries of the Onecoin drama
his exact role behind the public face of OneCoin remains unclear.
Ruja had a knack for glitz and glam
and received a world famous pop star for private concerts on her yacht.
But Konstantin is described as a more down to earth guy
and a womanizer with several women in different cities waiting for him.
Others say that he was just a useful idiot
who played an important role but did not mastermind the scam.
During his testimony against his sister,
he pleaded guilty to having run the OneCoin scam since
she disappeared, and it remains unclear if and what he knows
of his sister's disappearing act and whether he was in on it.
According to Ignatov himself,
the last information he has is that his sister was tired of the project's
haters.
Still, crypto scams are a dime a dozen.
Just how exactly did Onecoin go from a run of the mill rug pull
to a cult that scammed people for billions of dollars?
How did OneCoin scam people for billions of dollars?
A short answer is identifying people's weak spots or greed
and using a lack of technical understanding to exploit them.
A long answer reveals how
Dr.Ignatova scheme was always conceptualized according to the following
exit strategy - Take the money and run and blame someone else.
To understand why the OneCoin scam worked,
we have to return to a simpler time of cryptocurrencies, one where Bitcoin
was trading just above $500 and Litecoin was still a top five coin
and utility largely revolved around using crypto on the dark web.
Although many coins promise the same as OneCoin, simple payments
cheap and secure, none had the marketing pull of a charismatic woman with a Ph.D.
and work experience at top consultancies.
Dr. Ignatova even appeared in the Bulgarian version of Forbes.
How could she not be legit?
Of course,
the cover was only a paid for advertisement,
but the siren songs of easy riches for those that missed the Bitcoin train,
being that it went from zero to over $500, were just too tempting.
The monetization of the scheme was disarmingly simple.
Sell educational packages about cryptocurrency enabling you to be:
A) be an informed investor and B) mine the one coins that will later
skyrocket in value.
And it goes without saying that the packages came
with fancy names and had almost no upper limit in terms of pricing.
Later, even more expensive packages were thrown on the market,
with costs as high as €225,000.
However, the coins were never available for public trading,
although they had a nominal internal value on the OneCoin site,
users could not cash out and could only transfer their coins
in limited quantities within the closed system.
Behind MLM, a website uncovering MLM scams
detailed an example of how a restaurant in 2016 was willing
to accept OneCoins for a meal, but had only a 0.16% of the nominal value.
A meal that cost around £13 could actually be paid with with around
1399 OneCoins, which were actually
worth £8,572, according to the website.
But there was much more behind OneCoin behind crypto courses
with plagiarized content. Would allow the scam to grow into the billions.
And why was one coin so successful?
The BBC piece at the Missing Crypto Queen gives an insight
into what attracted investors to OneCoin in the first place.
Investors often told us what drew them in initially was the fear
that they would miss out on the next big thing. They'd read with envy
the story of people striking gold with Bitcoin and thought that one coin was
a second chance.
And many were struck by the personality and persuasiveness of the visionary Dr. Ruja.
Investors might not have understood the technology,
but they could see her talking to a huge audience or at the economic conference.
They were shown photographs of her numerous degrees in copies
of Forbes magazines with her portrait on the front cover.
But the authority and tech smokescreen are only half the story.
What also brought the victims in was the sense of community.
OneCoin was for the believers, a second chance for those that missed out
on Bitcoin, but still understood that cryptocurrencies were revolutionary.
It was a bona fide cult.
Nowhere was this more obvious than in the example of Jan
MC Adam, a Scots woman whose investment into one coin
and the eventual revelation that it was a scam made headlines in the UK.
She remembers tuning into a OneCoin webinar and being blown away
by the very uptempo, full of beans, full of passion style of presenters.
She invested €10,000 of her own money and persuaded
friends and family to invest a €250,000 of theirs.
Financially, life changing for many people.
But a few months later, Jen received a message from Tim Curry, a Bitcoin
enthusiast, that was educating people about scamming practices of OneCoin.
And after months, Jen started asking questions.
After persisting, she eventually found out that there was no blockchain
at all behind OneCoin.
It was all based on a SQL Server, which was no blockchain at all,
Something Jen understood at that point. In an ongoing court case, it was revealed
that Onecoin indeed actually did have a blockchain,
if only a very basic private blockchain that was likely not used for transactions.
Even though the riches lured people in like Jan,
the cult like aspects knocked out her critical thinking.
You're told not to believe anything from the outside world, she recalls.
That's what they call it. Haters.
Bitcoiners are haters. Even Google.
Any criticism or awkward questions were actively discouraged.
If you have any negativity, you should not be in this group.
But just how successful was the Onecoin scam?
One Telegraph quotes sales revenues between $4.4 and $19.4 billion.
The BBC obtained
quarterly revenue numbers detailing nine figure sums for months on end.
And just last year, law enforcement in the Seychelles were asked to look into
transactions of 230,000 bitcoins rumored to be connected to the scam.
But even though Ponzi scheme allegations surfaced in 2015,
already, OneCoin only stopped operating in 2019.
But why? How was the Onecoin scam revealed?
If a highly punctual person is late, you start wondering what happened to them.
But if they don't show up at all,
something is likely wrong. And that was actually the case for Ruja Ignatova was no show
at a convention of Onecoin promoters in Lisbon in October of 2017.
The indoctrinated promoters feared that her boss had been killed or abducted
by their enemies, the banks.
But according to a BBC report,
a court documents revealed that the mastermind behind Onecoin
boarded a flight from Sofia to Athens two weeks after the Lisbon event.
Her whereabouts
in those two weeks remain a mystery, and that is where her trace gets lost.
With Dr.Ignatova
hiding underground, it was her brother's turn to take over.
Even though the Bulgarian authorities raided the headquarters of Onecoin
in early 2018 at the request of German prosecutors,
the scam website continued operating
and by that time warnings of Onecoin being a scam were widespread.
Famously, Bjorn, a blockchain developer,
had been contacted by the Onecoin team to build a blockchain for them.
He explained how the team did not have a clue
about blockchain technology and warned people about investing in OneCoin.
But the scam only really stopped after Konstantin Ignatov was arrested
in March of 2019 in Los Angeles, and he later pleaded guilty
and went into witness protection.
The OneCoin site closed in December of 2019.
Generic Adams was only one example of the victims of the scam,
but Onecoin was a global Ponzi and the victims of the scam spread
from affluent mainstream neighborhoods to Ugandan slums.
Who Were the Victims of OneCoin? And the Missing Crypto Queen
podcast visited victims of the scam from around the globe.
Some of the alleged 3.5 million users were thousands of kilometers apart.
Igor Alberts and Andrea Cimbalae are successful MLM
practitioners living in a posh Amsterdam neighborhood.
When the two of them attended their first Onecoin conference
in May of 2015, they made €90,000 in their first month.
While multilevel marketing gets a bad
rap due to its ubiquitous scammers, it is not strictly illegal.
Mr. Albers perfected his MLM skills before joining the Onecoin cult
and found it easy to put them to work with an audience eager for easy money.
Soon they were making around €2 million per month and used some of the money
to buy more Onecoins as they pursued greater riches.
Albert's even made plans for how many OneCoins
he needed to become a billionaire.
The BBC describes how
Dr. Ignatova pulled off the perfect evil genius plan using the established
sales channels of existing MLM marketers for her fake product.
But when she actually disappeared,
Igor Alberts asked for evidence of the promised blockchains,
and in December of 2017, he actually quit saying - I felt responsibility, not guilt.
You can never be blamed for believing in something.
At the opposite end of the spectrum, the reporters
revealed of the story of Daniel Lienhardt, a 22 year old Ugandan
that invested $250 into OneCoin starter package.
And the reporters actually visited the slum Daniel
and the OneCoin promoter Prudence, who had signed him up, lived in
and Daniel sold three goats and his savings to get in on the scam in 2017.
At that point, Europe was turning over less money
for OneCoin, but developing nations were still going strong.
At the time, the podcast detailing the scam came out in 2019,
both Daniel and Prudence, who had stopped investing in Onecoin,
still had not told their victims the money was gone for good.
"I'm somehow hiding myself.
I don't want those people I introduced into OneCoin to see me moving around.
They can easily kill me."
Even his mother was still unaware of what actually happened to their investment
and Jen Mc Adam, the woman from Glasgow that raised mainstream
awareness for the scam, was working
with other victims on exposing the scam and recovering funds.
For 3 years now myself and a network of people globally have been exposing
the Onecoin scam and working with authorities globally.
My personal focus has been to focus on justice
for the victims, and this includes helping and supporting victims globally
and raising awareness of focusing on and speaking to media globally.
Participating and working with the BBC regarding the BBC's successful podcast,
The Missing Crypto Queen.
And one final question remains: What Happened to the OneCoin Scammers?
Sebastian Greenwood, the prolific scammer in the face of the brand,
has been indicted
and is being held at the New York prison for the duration of his trial.
Last year, he was found to have moved $20 million from a smuggled phone
he received. And Konstantin Ignatov pleaded guilty and revealed that
his sister had fears of being tipped off to the feds before disappearing.
According to him, Ruja Ignatova had gotten hold of a big passport
and asked for plane tickets to Vienna and Athens before disappearing.
However, despite going into witness protection,
Ignatov probably lied on two accounts during the trial.
A German news report from February of 2022 found messages from different women,
alluding that Ignatov is most likely behind bars again and may have lost value
as the Crown witness against other male factors in the case.
And there are several
trials ongoing in Germany against lawyers that co-operated with Dr.
Ignatova.
None of them have been concluded as of April of 2022, and the Missing Crypto
Queen podcast
did the most detailed digging into Ruja Ignatova's whereabouts so far.
Rumors they uncovered included her having Russian and Ukrainian
passports and traveling between Russia and Dubai.
Another one says that she may be hiding in plain sight thanks to plastic surgery.
The BBC reporters hired a private investigator
who claimed to have received information from colleagues that
Dr.Ignatova was moving around restaurants in Athens,
and they also visited the infamous Onecoin beauty pageant, in which the doctor
was rumored to have attended but were not able to identify her.
Unlike the Onecoin website,
Miss One Life is still online and even exists in one life.
The marketing arm of the scam among its gold sponsors.
Another trial led reporters to Frankfurt, where Ruja's ex-husband lives.
However, despite receiving information from a trusted source that Dr.
Ignatova indeed spends time in Frankfurt, they were unable to locate her.
In 2021, Onecoin was actually linked to terrorism financing.
And on May 11th of 2021, Inner City Press received a phone message
and then an email about a lawsuit filed about Onecoin and Ruja and Bitcoin.
And now this shows that crypto clean Ruja Ignatova may be under the protection
of a powerful state sponsor of terror in the Middle East.
Ruja Ignatova entered the United Arab Emirates
using a diplomatic passport through Dubai International Airport by a private plane
and in possession of a large sum of money.
Ignatova used accounts at a bank to launder money for terrorist groups
and had actually made several bank transfers to Afghanistan, Pakistan
and Yemen, which included terrorist
organizations. And Kuwaiti intelligence believes that Ignatova
was actually working for an unnamed state sponsor of terrorism.
Of all the crypto scams and Ponzi
schemes, OneCoin is the worst and yet most fascinating case.