Hello everyone and welcome to the fifth and final edition of My Greatest Crypto scams of all time. Yesterday on the fourth cz episode, I talked about Pincoin and Ifan and how they defrauded investors and users of over $660 million. If you didn't read that interesting one, then take a few minutes to go read it just right here.
So with that done, let's jump straight into my number 1 and the greatest scam (in my opinion and the opinion of many others) the Crypto world has ever experienced.
As far as Crypto scams go, OneCoin hands down rules them all, and not even only Crypto scams but scams in general. OneCoin was launched Dr. Ruja "Crypto Queen" Ignatova, a Bulgarian national and Sebastian Greenwood. According to her LinkedIn profile, Ignatova is a Law graduate from Oxford and a former Mckinsey employee. OneCoin claimed to function just like any other cryptocurrency. They claimed their coins were generated through mining and that they could then be used to make payments across the globe. OneCoin also came with its cryptocurrency wallet and the founders said that a total of 120 billion coins were available on the OneCoin network. Organizers then sold educational materials, promotional content and discounted packages to the network's participants and users were expected to pay for these programs. To however show that they were operating a multi-level-marketing style, participants were enticed with referral rewards to urge more users to join. 60% of the reward was given in EUR and the other 40% in tokens, but the tokens were more or less useless so only the 60% in fiat counted (and not everyone even received the 60%).
Take note however that the so called 'educational materials' were not cheap, the packages cost between €110 and €188,000. Each package included “tokens”, but however the only way to sell these tokens was thanks to the internal exchange that was open to only users that bought more than just their starter package (that is above €110). So you had to buy a higher package to get more tokens which users believed would increase in price (though it did) which was all part of the scam. OneCoin operated as a centralized network (not decentralised like what Crypto is meant to be) and people were able to trade their tokens for euros with the OneCoin company not other users. An explainer video on their YouTube channel would tell you that it was as a safe “platform for innovation that would change the financial system". They also claimed that the crypto adhered to Know-Your-Customer (KYC) rules to prevent money laundering (what an absolute joke, that's what they set out to do all along). Ignatova promoted OneCoin as a revolutionary and a competitor to banks and and they even started calling it "Bitcoin killer”. “In two years, nobody will speak about Bitcoin any more!” she had once said at an event about the scam coin (why do all scam coins say they are better than Bitcoin).
But what they wouldn't tell you is that OneCoin was never even a cryptocurrency. There was no public Blockchain or even a private one (as they claimed) for OneCoin. All they had was a centralized database of people and the tokens that victims were acquiring by buying the shitty packages. OneCoins were even never actually mined using any computer resources as Crypto coins were. Their worth was stipulated by the founders, who “programmed” the coin to increase from €0.50 ($0.56) to approximately €29.95 ($33.68) and defraud members of the public. Police investigations were later to reveal that the coins never had any real worth and were worth shit. OneCoin later bought two Blockchain audits by some unknown German lawyers so when they were accused that there was no evidence of a Blockchain, they just showed you 2 blockchain audits. Everyone should have began to trust them even less when OneCoin was not listed on any public exchange because they didn't have a Blockchain.
The problems started to show when the users and some high ranked members began to get impatient as they had been waiting for the long-promised exchange that would allow the trading of OneCoin. Ignatova and her team had for a long time been shifting enquiries about an exchange (one that had been promised for a very very long time too) where users would be able to trade their OneCoin for Fiat, not one where they sold it to the OneCoin company. The exchange had constantly been delayed, and so an eventwas organised in Lisbon, in October of 2017, to abate fears and give a date for the exchange. And that's when it all began to crumble;
IGNATOVA NEVER SHOWED UP
High-ranked members, team members, and even her own blood brother were shocked. To this day the FBI has only 1 last record of Dr. Ruja, and it is that she booked a flight from Sofia to Athens and since that day till today she vanished. Konstantin Ignatov, her brother, took her place and after 2 years in charge as OneCoin CEO, he was arrested at Los Angles International Airport in March 2019 and pleaded guilty to several charges, including money laundering and fraud. Since then a lot of arrests have been made to the OneCoin heirachy. Sebastian Greenwood, her co-founder, was extradited from Thailand to the US to face trial following an operation involving the FBI in November 2018. Mark Scott, the company lawyer was also facing trial as he allegedly made $50 million from re-routing $400 million from the scam. He was found guilty of money laundering and fraud and is now facing a possible 50-year prison sentence. Scott was formerly a partner at legal firm Locke Lord, and he is believed to have registered a raft of fake companies, offshore accounts, and other ways to launder funds between the end of 2015 and mid-2017.
Ignatova also faces some charges of her own, from securities fraud, to wire fraud, and money laundering, but she is still no where to be found. Her brother on the other hand pleaded guilty to money laundering and fraud charges and is now facing a maximum of 90 years behind bars. However, he is reportedly worried that his admission of guilt would lead to the revelation of the identities of powerful individuals involved behind the scene who may seek vengeance against him or his family. For this reason, he may be given a new identity under the US witness protection program. According to the U.S government, OneCoin scammed individuals of around $4 billion, but some internal sources involved in the OneCoin project say that it is more close to $19.4 billion. This means that it is probably the biggest scam in world history.
In the end, while Ignatova became a billionaire from this scam, it had a devastating fallout. Families who invested their all into the scam were torn apart, goats and houses were sold to buy into the scam, and even churches were known to have incited their members to buy into the scam.
With the sad story of OneCoin, this series has come to a well deserving close. It has been my utmost pleasure to write this, and it was more fun than I would have predicted when I begun writing it. Like I said from the beginning, I did not write this series to make fun of (or paint them as fools) those who lost money in these scams. I wrote it for us to learn what not to do and what to stay away from to avoid a repeat. I sure hope you learnt something from the series. It has been fun detailing them to you guys, and researching about them has also taught me a few things. A big thank you to everyone who spoke out because of this series of how they had been scammed, and also to everyone who learnt something from this. Again it was an honour, and pls show some love if you enjoyed the series. I will be coming up with another series of some of the greatest hacks the Crypto world has experienced, but for now from me it's bye guys and...........