The “Missing Cryptoqueen” saga has made long-term headlines since co-founders Ruja Ignatova and Karl Sebastian Greenwood began a cryptocurrency rip-off generally known as OneCoin, approach again in 2014.
Ignatova, who hails from Bulgaria, and who apparently favored to be generally known as The Cryptoqueen (her cost sheet even reveals that identify as an alias), has been needed within the US on numerous wire fraud, cash laundering and securities fraud fees since October 2017.
According to the US Department of Justice (DOJ), about two weeks after fees had been filed in opposition to her within the US, Ignatova flew from Sofia in Bulgaria to Athens in Greece…
…and hasn’t been heard of since, thus her up to date nickname of Missing Cryptoqueen.
In mid-2022, Ignotova was thought-about criminally vital sufficient – her rip-off is claimed to have pulled in greater than $4 billion in “investments” from greater than 3,000,000 folks world wide – that she was added to the FBI’s Ten Most Wanted Fugitives record, with a $100,000 reward for her seize:
Greenwood, nevertheless, went to dwell in Thailand, the place he was arrested by the Royal Thai Police on the tropical island of Koh Samui in June 2018, extradited to the US, and remanded in custody.
He’s been incarcerated ever since, and he appears to be like set to remain locked up for a few years to come back, having simply pleaded responsible to a few legal fees, together with wire fraud and cash laundering.
Building a pyramid
OneCoin seemed to be what’s generally known as a pyramid scheme, or MLM system, quick for multi-level advertising, the place the individuals who purchase in in the beginning earn fee for bringing within the subsequent wave of “investors”, who in flip earn fee from bringing within the third wave, and so forth.
Many international locations have regulatory restrictions on pyramid promoting techniques, not least as a result of they give the impression of being lots higher on paper than they usually end up in actual life.
If nothing else, their enterprise mannequin is difficult to maintain, given that every new recruit has to usher in N new recruits of their very own, and so forth, and so forth, like a tradition in biology class that expands to fill a petri dish at alarming pace, solely to eat all its sources and die out simply as dramatically.
For everybody to succeed, these schemes sometimes have to develop exponentially, just like the tradition in that petri dish: if the primary particular person wants to usher in ten extra folks, and people ten want to search out ten extra, and so forth, then the “pyramid” wants 1 + 10 + 100 + 1000 = 1111 contributors after simply three “generations”.
As thrilling and as profitable as that sounds, after an extra three generations, you want 1,111,111 folks on board to proceed the income mannequin that was offered to you, which is about 15% of the inhabitants of New York or London.
Three generations after that, you’d require about 15% of the world’s inhabitants to have purchased into the scheme you’re already dedicated to…
…and even if you happen to actually may get that far, you’d fairly actually run out of individuals within the very subsequent era, even if you happen to signed up each new toddler inside seconds of beginning.
A pyramid with no product
But OneCoin took the pyramid promoting course of one step additional, turning it into what’s identified within the jargon as a Ponzi scheme, after an early perpetrator of this sort of rip-off known as Charles Ponzi.
OneCoin didn’t generate enormous earnings for its founders by making a pyramid of “investment partners” who ended up dedicated to promoting the corporate’s merchandise right into a market that was ever extra crowded with competing sellers.
OneCoin made its billions by not really having a product in any respect.
The OneCoin cryptocurrency token that the corporate “sold” didn’t really exist, had no so-called blockchain or ledger to show its existence and exercise, and couldn’t really be traded in any respect.
As the DOJ’s report explains:
OneCoin falsely claimed that the worth of OneCoin was primarily based on market provide and demand, when in reality, the worth of the cryptocurrency was merely set by OneCoin itself.
[Ignatova stated in emails to Greenwood that:] “We can manipulate the exchange by simulating some volatility and intraday pricing,” [… and:] “Goal 6: Trading coin, stable exchange, always close on a high price end of day open day with high price, build confidence – better manipulation so they are happy.”
As the DOJ explains, the purported worth of a OneCoin grew steadily from €0.50 to roughly €29.95 per coin, and the purported worth of OneCoins by no means decreased in worth, and but the DOJ states that “OneCoins were entirely worthless.”
Ignatova […] wrote to Greenwood, “We are not mining actually – but telling people shit,” to which Greenwood responded, “Can any member (trying to be clever) find out that we actually are not investing in machines to mine but it is merely a piece of software doing this for us?”
The scammers went out of their technique to entice traders, with the charismatic Ignatova, in her “Cryptoqueen” persona, wowing the gang and drawing in victims on the again of the thrilling tales folks had heard about cryptocurrency typically, and Bitcoin specifically:
Greenwood and Ignatova promoted OneCoin, together with at official OneCoin occasions all around the globe. One such occasion, known as “Coin Rush,” was held at Wembley Arena in London on June 11, 2016. Thousands of OneCoin members attended Coin Rush. During the occasion, Greenwood launched Ignatova to the gang, stating partly: “This is the creator, the mastermind, the founder of cryptocurrency, of OneCoin … Now, this will be the biggest welcoming on stage that we’ve ever done in history.” Then, to the tune of Alicia Keys’s “Girl on Fire,” and surrounded by precise onstage fireworks, Ignatova strode onto the Wembley Arena stage sporting a purple ball robe. She proceeded to repeatedly and favorably examine her fraudulent cryptocurrency to Bitcoin, stating, amongst different issues, “OneCoin … is supposed to be the Bitcoin killer” and “In two years, nobody will speak about Bitcoin any more.”
The power-plays and the stage drama appear to have performed the trick, on condition that Greenwood is claimed by the DOJ to earned roughly €20 million a month in his position as the highest MLM “distributor” of OneCoin.
If Greenwood had been to get the utmost penalty for every of the crimes to which he’s pleaded responsible, he’d find yourself with 20 years for every; if served consecutively, he’d due to this fact get a 60-year custodial sentence.
As for the greater than 3,000,000 individuals who parted with their cash in good, if misguided religion…
…whether or not any of them will get their a refund within the subsequent 60 years is unknown, however sadly appears unlikely.
What to do?
- Beware any on-line schemes that make guarantees {that a} correctly regulated funding wouldn’t be allowed to do. Investment laws usually exist to maintain the lid on wild and unachievable claims, so be sceptical of any scheme that units out to sidestep that form of management and expects you to take a position with none regulatory safety in any respect.
- Don’t be taken in by cryptocoin jargon and a smart-looking web site or app. Anyone can arrange a believable-looking web site or construct an app to point out upbeat however fictitious real-time “graphs” and made-up on-line “comments” that appear to be awash with upvotes and positivity. Open supply web site and running a blog instruments make it low-cost and simple to create professional-looking content material. But these instruments can’t cease a criminal filling an internet site with faux information.
- Consider asking somebody with an IT background whom you already know and belief for recommendation. Find somebody who isn’t already a part of the scheme and doesn’t present any specific curiosity in it. Be cautious of recommendation or endorsement from people who find themselves (or declare to be) a part of the scheme already. They might be paid shills, or faux personas, or they might be early winners who’ve been paid out with cash ripped off from later traders, and thus co-opted into selling the rip-off themselves.
- If it sounds too good to be true, assume that it isn’t true. That recommendation applies whether or not it’s a brand new cryptocurrency, a particular on-line provide, a brand new on-line service, a survey to win a prize, and even simply the great previous lure of “free stuff”. Take your time to know what you’re signing up for.
Remember: If doubtful/Don’t give it out, and that undoubtedly consists of your cash.
By the best way, the DOJ asks:
If you’ve gotten any details about Ruja Ignatova’s whereabouts, please contact your native FBI workplace or the closest American Embassy or Consulate. Tips will be reported anonymously and can be reported on-line at suggestions.fbi.gov.
Take care on the market!