Konstantin Ignatov, born in Bulgaria, was detained in the United States on suspicion of fraud. He was one of the founders of the OneCoin cryptocurrency project.

Large-scale fraud

The prosecutor's office of the Southern District of New York reported the arrest of Konstantin Ignatov, who was detained on 6 March 2019 at the Los Angeles International Airport. He was arrested on a wire fraud conspiracy charge stemming from his role as the leader of an international pyramid scheme that involved the marketing of a fraudulent cryptocurrency called “OneCoin.” Additionally to Ignatov, his sister Ruja Ignatova, who is also the founder and first leader of OneCoin, is charged with one count each of wire fraud, conspiracy to commit wire fraud, securities fraud, and conspiracy to commit money laundering, each of which carries a maximum sentence of 20 years sentence, and one count of conspiracy to commit securities fraud, which carries a maximum sentence of five years in prison.

Last year, another alleged member of the OneCoin project, Mark Scott, was detained in Massachusetts.

According to FBI Deputy Director William Sweeney Jr., OneCoin has no real value and cannot be used to buy anything. “As we allege, 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.”

According to the US Department of Justice, participants of the OneCoin pyramid make a profit from newly arrived investors, and lied about usage of specialized equipment for token mining. Currently, the company continues to function, “OneCoin cryptocurrency” is used by more than three million people worldwide. For the period from the IV quarter of 2014 to the III quarter of 2016, OneCoin Ltd received €3.333 billion in sales revenue. The company's profit for the same period amounted to €2.232 billion. The main business model of OneCoin is the sale of training courses in cryptocurrency trading.

World Vs OneCoin

Authorities and regulators worldwide have been desperately trying to fight OneCoin for several years. Authorities in many European countries warned citizens about the risks, hazards and signs of fraudulent schemes of the OneCoin project. In 2018, 98 people were accused of organizing the OneCoin Ponzi scheme and stealing $2 billion in China. Some suspects have already been convicted and received up to 5 years in prison and fines ranging from 10,000 to 5,000,000 yuan ($1,565 - $783,000).

In early 2018, Bulgarian law enforcement agencies raided the OneCoin offices in Sofia as part of an international investigation. The Bulgarian prosecutor’s office acted at the request of the German authorities, who sued the founder of Onecoin, Ruja Ignatova, 38-years-old native of Bulgaria, who live in Germany for many years. She served as a leader of OneCoin till October 2017. Starting in late 2017, Ignatov, who is Ignatova’s younger brother, assumed high-level positions at OneCoin.

In one email Ignatova described her thoughts on the “exit strategy” for OneCoin. The first option she listed was, “Take the money and run and blame someone else for this.”