OneCoin Founder’s Brother to Testify Against Her
In the latest installment of a saga that saw investors around the world defrauded out of as much as US$16 billion, the co-founder of a disgraced cryptocurrency firm has agreed to testify against the company’s one-time chief, his sister.
Judge Valerie Caproni for the Southern District of New York on Thursday approved an order dismissing a civil action against Konstantin Ignatov, brother of OneCoin founder Ruja Ignatova, in exchange for his cooperation with the lawsuit, which is being brought against the siblings by former investors in the company.
Should the matter go to trial, he will be required to testify against his sister concerning her part in what is, to date, one of the largest Ponzi schemes in history.
It is not the first time that Ignatov has agreed to cooperate with U.S. prosecutors. In a separate but related criminal case, Ignatov pled guilty to charges of money laundering and conspiracy to commit wire fraud last October.
His testimony was later instrumental in securing the conviction of former OneCoin lawyer and alleged money launderer Mark Scott, according to cryptocurrency news publication CoinTelegraph.
Ignatov’s cooperation with the courts is seen by many as a bid to obtain leniency in his own sentencing, scheduled for November this year.
He faces up to 90 years in prison.
OCCRP previously reported that while alleged mastermind Ruja Ignatova remains at large, experts with knowledge of the case believe that she may be hiding out in the United Arab Emirates.
Described by the Justice Department as “an old-school pyramid scheme on a new-school platform,” the sensational story of the OneCoin scam has garnered attention all over the world due to the immense popularity of the aptly-named BBC podcast, ‘The Missing Cryptoqueen’.
A recent episode of the popular BBC Sounds podcast the “Missing Cryptoqueen” has shown the public a very interesting view of the powerful OneCoin Ponzi. According to two witnesses the BBC interviewed, a London law firm and a reputation management company allegedly managed to get the UK’s Financial Conduct Authority (FCA) to take down an OneCoin warning.
The Bulgaria-based Ponzi scheme OneCoin was once described by The Times as “one of the biggest scams in history” managing to net $4 billion from operations. The pyramid scheme has become a hot topic over the years, and it’s invoked the BBC Sounds podcast the “Missing Cryptoqueen.”
The show stars the British author and journalist, Jamie Bartlett, and its also produced by the well-known documentary producer Georgia Catt. The latest BBC Sounds podcast episode 9, dives into the continued search for OneCoin’s missing leader Ruja Ignatova, otherwise known as the ‘Cryptoqueen.’
During the episode, Bartlett explains how the Cryptoqueen’s brother, Konstantin Ignatov, has been working with U.S. law enforcement. Ignatov told the court a tale about Ruja’s relationship with Gilbert Armenta and how Ruja allegedly took off with powerful Russians.
Then Bartlett discusses two individuals who had information on a London law firm and a “crisis management PR company.” One of the men was a lawyer named Gary Gilford and the other was a former Chelgate employee Simon Harris. Chelgate is the reputation management company that ostensibly helped OneCoin avoid problems.
Two people claim that a London law firm and a well-known reputation management company “pressurized” the UK’s Financial Conduct Authority to weaken its efforts in regard to warning retail investors.
Both Gilford and Harris never met each other, but they both told a tale of how the London law firm and Chelgate managed to get the FCA to remove the Onecoin warning issued in September 2016. Ten months later, the FCA warning, which warned retail investors about investing in the Onecoin project, was removed.
Harris explained that Chelgate worked with the law firm in order to “pressurize” the FCA into “weakening” the regulator’s efforts against Onecoin. The witnesses say that the Cryptoqueen and many high up members of the Ponzi were super pleased with the FCA warning removal. The discussion with the former Chelgate employee Harris begins at the 22:00 minute mark during the “Missing Cryptoqueen” episode.
Meanwhile, one of the Onecoin leaders, Sebastian Greenwood had his pre-trial conference on Friday. Matthew Russell Lee from the Inner City Press reported from the courtroom, and explained that Greenwood’s next court date will be on October 5. Greenwood has been charged but the court seems to be having difficulty with specific court processes. The lawyers say that “video conferences take ten days to set up”
“We haven’t given all of the discovery due to discussions of a pre-trial disposition,” Greenwood’s prosecutors said. “We’ve shown him his own emails to show him his knowledge and involvement from the very beginning of this fraud scheme.”
Additionally, it appears that OneCoin investors Donald Berdeaux and Christine Grablis have agreed to settle with Konstantin Ignatov. The amount of funds agreed upon is not disclosed, but the two plaintiffs represent investors who suffered losses between 2014-2018.
“Plaintiffs and defendant Konstantin Ignatov (together, the “Parties”) wish to discontinue between them without prejudice the claims asserted against Defendant Ignatov while not impeding in any way Plaintiffs’ further prosecution of their claims against the other defendants in this action,” the court filing detailed.
The report from the Inner City Press also reveals that Konstantin Ignatov’s plea deal is a bit of a mystery. “Now in August 2020 a question has arisen,” explains Lee’s report. “Where is Konstantin Ignatov? After his sentencing was published back four months from July 8, as Inner City Press reported, now his lawyer in a filing in the civil case Grablis v. OneCoin Ltd has asked for an extension stating ‘Mr. Ignatov is presently incarcerated.’”
“But the U.S. Bureau of Prisons website, for the one Konstantin Ignatov in the system, says ‘Released On: 03/13/2020,’” Lee’s report adds. Even when cooperators are in the private GEO jail the BOP uses, they are listed as incarcerated. So where is Konstantin Ignatov?” the reporter asked.
Source: Bitcoin Com
Manhattan U.S. Attorney Announces Charges Against Leaders Of “OneCoin,”
A Multibillion-Dollar Pyramid Scheme Involving The Sale Of A Fraudulent Cryptocurrency
An Indictment charging IGNATOV’s sister, RUJA IGNATOVA – a founder and original leader of OneCoin – with wire fraud, securities fraud, and money laundering offenses was unsealed yesterday. As a result of misrepresentations that IGNATOV, IGNATOVA, and others made about OneCoin, victims invested billions of dollars worldwide in the fraudulent cryptocurrency. Following his arrest, IGNATOV appeared in Magistrate Court in the Central District of California and was detained on the charge contained in the Complaint.
Manhattan U.S. Attorney Geoffrey S. Berman said: “As alleged, these defendants created a multibillion-dollar ‘cryptocurrency’ company based completely on lies and deceit. They promised big returns and minimal risk, but, as alleged, this business was a pyramid scheme based on smoke and mirrors more than zeroes and ones. Investors were victimized while the defendants got rich. Our Office has a history of successfully targeting, arresting, and convicting financial fraudsters, and this case is no different.”
New York County District Attorney Cyrus R. Vance Jr., said: “As alleged in the indictment, these defendants executed an old-school pyramid scheme on a new-school platform, compromising the integrity of New York’s financial system and defrauding investors out of billions. Our Office urges all crypto investors to scrutinize investment opportunities, recognize the prevalence of fraud in this underregulated space, and proceed with caution. I commend U.S. Attorney Berman and my Office’s Major Economic Crimes Bureau for their globe-spanning investigative work and shared commitment to protecting our markets from sophisticated white-collar fraudsters.”
IRS Special Agent in Charge John R. Tafur said: “This is an old scam with a virtual twist. As alleged in court documents, the cryptocurrency OneCoin was established for the sole purpose of defrauding investors. IGNATOV and IGNATOVA allegedly convinced victims to invest in OneCoin based on complete lies about the virtual currency. IRS Criminal Investigation is committed to investigating cryptocurrency scams in an effort to protect the American public and bring cryptocurrency crooks to justice.”
FBI Assistant Director-in-Charge William Sweeney Jr. said: “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 allegations contained in the Complaint charging KONSTANTIN IGNATOV and the Indictment charging RUJA IGNATOVA, and in other court papers, and other documents in the public record:
IGNATOV currently serves as the top leader of OneCoin Ltd., a company marketing a purported cryptocurrency named “OneCoin,” which the investigation has revealed is in fact, a fraudulent pyramid scheme. OneCoin Ltd. was co-founded in 2014 by IGNATOVA and is based in Sofia, Bulgaria. IGNATOVA served as OneCoin’s top leader until her disappearance from public view, in October 2017. Starting in late 2017, IGNATOV, who is IGNATOVA’s younger brother, assumed high-level positions at OneCoin, rising to the top leadership position by mid-2018.
OneCoin Ltd. operates as a multi-level marketing network through which members receive commissions for recruiting others to purchase cryptocurrency packages. This multi-level marketing structure appears to have influenced the rapid growth of the OneCoin member network. Indeed, OneCoin Ltd. has claimed to have more than 3 million members worldwide, including victims living and/or working within the Southern District of New York. OneCoin continues to operate to this day.
As a result of misrepresentations made by IGNATOV, IGNATOVA, and other OneCoin representatives, victims throughout the world wired investment funds to OneCoin-controlled bank accounts in order to purchase OneCoin packages. Records obtained in the course of the investigation show that, between the fourth quarter of 2014 and the third quarter of 2016 alone, OneCoin Ltd. generated €3.353 billion in sales revenue and earned “profits” of €2.232 billion.
Among a number of other representations, OneCoin Ltd. has claimed that the OneCoin cryptocurrency is “mined” using mining servers maintained and operated by the company and that the value of OneCoin is based on market supply and demand. The purported value of a OneCoin has steadily grown from €0.50 to approximately €29.95 per coin, as of January 2019.
In fact, the value of OneCoin is determined internally and not based on market supply and demand; and OneCoins are not mined using computer resources. Moreover, the investigation has revealed that IGNATOVA and her co-founder conceived of and built the OneCoin business fully intending to use it to defraud investors. For example, in one email between IGNATOVA and her co-founder, IGNATOVA described her thoughts on the “exit strategy” for OneCoin. The first option that IGNATOVA listed was, “Take the money and run and blame someone else for this . . . .”
Additionally, OneCoin Ltd. has claimed to have a private “blockchain,” or a digital ledger identifying OneCoins and recording historical transactions. The investigation has revealed that OneCoin lacks a true blockchain, that is, a public and verifiable blockchain. Moreover, by approximately March 2015, IGNATOVA and her co-founder had started allocating to OneCoin members coins that did not even exist in OneCoin’s purported private blockchain, referring to those coins as “fake coins.”
As the founder and leader of OneCoin Ltd., IGNATOVA participated in efforts to market OneCoin to U.S. victim-investors. For example, on July 4, 2015, IGNATOVA participated in an online webinar, later posted to YouTube.com, in which IGNATOVA announced the official opening of the United States market for OneCoin.
Since taking over leadership of OneCoin following IGNATOVA’s disappearance from publicly running the company, IGNATOV has himself made false representations to OneCoin members to solicit trader package purchases and investments into the company. For example, IGNATOV has repeatedly represented that an “initial public offering” of OneCoin would occur on various dates in 2018 and 2019, in an effort to generate excitement and solicit additional investments from member victims. However, the purported offering was repeatedly postponed, and no such offering has taken place.
Moreover, IGNATOV has been personally involved in manually setting and increasing the purported Euro value of OneCoin, contradicting claims that the value is set by supply and demand. Finally, the investigation has revealed that IGNATOV is aware that OneCoin-derived funds have been routed through a series of purported “investment fund” accounts used to hide the origin of the money, i.e., to launder OneCoin fraud proceeds.
Between February 27, 2019, and March 6, 2019, IGNATOV traveled to the United States to conduct OneCoin-related business, including in Las Vegas, Nevada, where he stayed at a casino resort. While in Las Vegas, IGNATOV met with a number of OneCoin affiliates. During the meeting, one of the first questions posed to IGNATOV was when OneCoin members would be able to monetize, or “cash out,” their OneCoins. IGNATOV reportedly responded, “if you are here to cash out, leave this room now, because you don’t understand what this project is about.”
IGNATOVA, a third defendant, MARK S. SCOTT, and others agreed to launder the proceeds of the OneCoin fraud scheme. Specifically, IGNATOVA, SCOTT, and others agreed with others to conduct transactions involving OneCoin fraud proceeds in order to conceal and disguise the nature, location, source, ownership, and control of the proceeds.
SCOTT, a former partner of a major United States law firm, assisted IGNATOVA and others in laundering more than $400 million through a series of purported investment funds holding bank accounts at financial institutions in the Cayman Islands and the Republic of Ireland, among other locations. The indictment charging SCOTT was previously unsealed, and SCOTT was arrested in Barnstable, Massachusetts, on September 5, 2018. SCOTT’s case is currently pending before U.S. District Judge Edgardo Ramos.
Source: Manhatten U,S. Attorney
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