Cyber Crime: Konstantin Ignatov Charged International Pyramid Scheme That Involved The Marketing Of a Fraudulent Cryptocurrency

<h2>Manhattan U&period;S&period; Attorney Announces Charges Against Leaders Of &OpenCurlyDoubleQuote;OneCoin&comma;” A Multibillion-Dollar Pyramid Scheme Involving The Sale Of A Fraudulent Cryptocurrency<&sol;h2>&NewLine;<p><strong>Current Leader Konstantin Ignatov Arrested at Los Angeles International Airport<&sol;strong><&sol;p>&NewLine;<div class&equals;"mh-content-ad"><script async src&equals;"https&colon;&sol;&sol;pagead2&period;googlesyndication&period;com&sol;pagead&sol;js&sol;adsbygoogle&period;js&quest;client&equals;ca-pub-9162800720558968"&NewLine; crossorigin&equals;"anonymous"><&sol;script>&NewLine;<ins class&equals;"adsbygoogle"&NewLine; style&equals;"display&colon;block&semi; text-align&colon;center&semi;"&NewLine; data-ad-layout&equals;"in-article"&NewLine; data-ad-format&equals;"fluid"&NewLine; data-ad-client&equals;"ca-pub-9162800720558968"&NewLine; data-ad-slot&equals;"1081854981"><&sol;ins>&NewLine;<script>&NewLine; &lpar;adsbygoogle &equals; window&period;adsbygoogle &vert;&vert; &lbrack;&rsqb;&rpar;&period;push&lpar;&lbrace;&rcub;&rpar;&semi;&NewLine;<&sol;script><&sol;div>&NewLine;<p>Geoffrey S&period; Berman&comma; the United States Attorney for the Southern District of New York&comma; Cyrus R&period; Vance Jr&period;&comma; the District Attorney for the County of New York&comma; John R&period; Tafur&comma; the Special Agent in Charge of the Newark Field Office of the Internal Revenue Service-Criminal Investigation &lpar;&OpenCurlyDoubleQuote;IRS-CI”&rpar;&comma; William F&period; Sweeney Jr&period;&comma; and the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation &lpar;&OpenCurlyDoubleQuote;FBI”&rpar;&comma; announced that KONSTANTIN IGNATOV was arrested March 6&comma; 2019&comma; at the Los Angeles International Airport&comma; 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 &OpenCurlyDoubleQuote;OneCoin&period;” An Indictment charging IGNATOV’s sister&comma; RUJA IGNATOVA – a founder and original leader of OneCoin – with wire fraud&comma; securities fraud&comma; and money laundering offenses was unsealed yesterday&period; As a result of misrepresentations that IGNATOV&comma; IGNATOVA&comma; and others made about OneCoin&comma; victims invested billions of dollars worldwide in the fraudulent cryptocurrency&period; Following his arrest&comma; IGNATOV appeared in Magistrate Court in the Central District of California&comma; and was detained on the charge contained in the Complaint&period;<&sol;p>&NewLine;<p>Manhattan U&period;S&period; Attorney Geoffrey S&period; Berman said&colon; &OpenCurlyDoubleQuote;As alleged&comma; these defendants created a multibillion-dollar &OpenCurlyQuote;cryptocurrency’ company based completely on lies and deceit&period; They promised big returns and minimal risk&comma; but&comma; as alleged&comma; this business was a pyramid scheme based on smoke and mirrors more than zeroes and ones&period; Investors were victimized while the defendants got rich&period; Our Office has a history of successfully targeting&comma; arresting&comma; and convicting <a class&equals;"wpil&lowbar;keyword&lowbar;link" href&equals;"https&colon;&sol;&sol;www&period;fraudswatch&period;com&sol;tag&sol;financial-fraud&sol;amp&sol;" title&equals;"financial" data-wpil-keyword-link&equals;"linked" data-wpil-monitor-id&equals;"915">financial<&sol;a> fraudsters&comma; and this case is no different&period;”<&sol;p>&NewLine;<p>New York County District Attorney Cyrus R&period; Vance&comma; Jr&period;&comma; said&colon; &OpenCurlyDoubleQuote;As alleged in the indictment&comma; these defendants executed an old-school pyramid scheme on a new-school platform&comma; compromising the integrity of New York’s financial system and defrauding investors out of billions&period; Our Office urges all crypto investors to scrutinize investment opportunities&comma; recognize the prevalence of fraud in this underregulated space&comma; and proceed with caution&period; I commend U&period;S&period; 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&period;”<&sol;p>&NewLine;<p>IRS Special Agent in Charge John R&period; Tafur said&colon; &OpenCurlyDoubleQuote;This is an old scam with a virtual twist&period; As alleged in court documents&comma; the cryptocurrency OneCoin was established for the sole purpose of defrauding investors&period; IGNATOV and IGNATOVA allegedly convinced victims to invest in OneCoin based on complete lies about the virtual currency&period; IRS Criminal Investigation is committed to investigating cryptocurrency scams in an effort to protect the American public and bring cryptocurrency crooks to justice&period;”<&sol;p>&NewLine;<p>FBI Assistant Director-in-Charge William Sweeney&comma; Jr&period; said&colon; &OpenCurlyDoubleQuote;As we allege&comma; OneCoin was a cryptocurrency existing only in the minds of its creators and their co-conspirators&period; Unlike authentic cryptocurrencies&comma; which maintain records of their investors’ transaction history&comma; OneCoin had no real value&period; It offered investors no method of tracing their money&comma; and it could not be used to purchase anything&period; In fact&comma; the only ones who stood to benefit from its existence were its founders and co-conspirators&period; Whether you’re dealing with virtual currency or cold&comma; hard cash&comma; we urge the public to exercise due diligence with any investment&period;”<&sol;p>&NewLine;<p>According to the allegations contained in the Complaint charging KONSTANTIN IGNATOV and the Indictment charging RUJA IGNATOVA&comma; and in other court papers&comma; and other documents in the public record&colon;<&sol;p>&NewLine;<p>IGNATOV currently serves as the top leader of OneCoin Ltd&period;&comma; a company marketing a purported cryptocurrency named &OpenCurlyDoubleQuote;OneCoin&comma;” which the investigation has revealed is in fact a fraudulent pyramid scheme&period; OneCoin Ltd&period; was co-founded in 2014 by IGNATOVA&comma; and is based in Sofia&comma; Bulgaria&period; IGNATOVA served as OneCoin’s top leader until her disappearance from public view&comma; in October 2017&period; Starting in late 2017&comma; IGNATOV&comma; who is IGNATOVA’s younger brother&comma; assumed high-level positions at OneCoin&comma; rising to the top leadership position by mid-2018&period;<&sol;p>&NewLine;<p>OneCoin Ltd&period; operates as a multi-level marketing network through which members receive commissions for recruiting others to purchase cryptocurrency packages&period; This multi-level marketing structure appears to have influenced rapid growth of the OneCoin member network&period; Indeed&comma; OneCoin Ltd&period; has claimed to have more than 3 million members worldwide&comma; including victims living and&sol;or working within the Southern District of New York&period; OneCoin continues to operate to this day&period;<&sol;p>&NewLine;<p>As a result of misrepresentations made by IGNATOV&comma; IGNATOVA&comma; and other OneCoin representatives&comma; victims throughout the world wired investment funds to OneCoin-controlled bank accounts in order to purchase OneCoin packages&period; Records obtained in the course of the investigation show that&comma; between the fourth quarter of 2014 and the third quarter of 2016 alone&comma; OneCoin Ltd&period; generated €3&period;353 billion in sales revenue and earned &OpenCurlyDoubleQuote;profits” of €2&period;232 billion&period;<&sol;p>&NewLine;<p>Among a number of other representations&comma; OneCoin Ltd&period; has claimed that the OneCoin cryptocurrency is &OpenCurlyDoubleQuote;mined” using mining servers maintained and operated by the company&comma; and that the value of OneCoin is based on market supply and demand&period; The purported value of a OneCoin has steadily grown from €0&period;50 to approximately €29&period;95 per coin&comma; as of January 2019&period; In fact&comma; the value of OneCoin is determined internally and not based on market supply and demand&semi; and OneCoins are not mined using computer resources&period; Moreover&comma; 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&period; For example&comma; in one email between IGNATOVA and her co-founder&comma; IGNATOVA described her thoughts on the &OpenCurlyDoubleQuote;exit strategy” for OneCoin&period; The first option that IGNATOVA listed was&comma; &OpenCurlyDoubleQuote;Take the money and run and blame someone else for this &period; &period; &period; &period;”<&sol;p>&NewLine;<p>Additionally&comma; OneCoin Ltd&period; has claimed to have a private &OpenCurlyDoubleQuote;blockchain&comma;” or a digital ledger identifying OneCoins and recording historical transactions&period; The investigation has revealed that OneCoin lacks a true blockchain&comma; that is&comma; a public and verifiable blockchain&period; Moreover&comma; by approximately March 2015&comma; IGNATOVA and her co-founder had started allocating to OneCoin members coins that did not even exist in OneCoin’s purported private blockchain&comma; referring to those coins as &OpenCurlyDoubleQuote;fake coins&period;”<&sol;p>&NewLine;<p>As the founder and leader of OneCoin Ltd&period;&comma; IGNATOVA participated in efforts to market OneCoin to U&period;S&period; victim-investors&period; For example&comma; on July 4&comma; 2015&comma; IGNATOVA participated in an online webinar&comma; later posted to YouTube&period;com&comma; in which IGNATOVA announced the official opening of the United States market for OneCoin&period;<&sol;p>&NewLine;<p>Since taking over leadership of OneCoin following IGNATOVA’s disappearance from publicly running the company&comma; IGNATOV has himself made false representations to OneCoin members to solicit trader package purchases and investments into the company&period; For example&comma; IGNATOV has repeatedly represented that an &OpenCurlyDoubleQuote;initial public offering” of OneCoin would occur on various dates in 2018 and 2019&comma; in an effort to generate excitement and solicit additional investments from member victims&period; However&comma; the purported offering was repeatedly postponed&comma; and no such offering has taken place&period; Moreover&comma; IGNATOV has been personally involved in manually setting and increasing the purported Euro value of OneCoin&comma; contradicting claims that the value is set by supply and demand&period; Finally&comma; the investigation has revealed that IGNATOV is aware that OneCoin-derived funds have been routed through a series of purported &OpenCurlyDoubleQuote;investment fund” accounts used to hide the origin of the money&comma; i&period;e&period;&comma; to launder OneCoin fraud proceeds&period;<&sol;p>&NewLine;<p>Between February 27&comma; 2019&comma; and March 6&comma; 2019&comma; IGNATOV travelled to the United States to conduct OneCoin-related business&comma; including in Las Vegas&comma; Nevada&comma; where he stayed at a casino resort&period; While in Las Vegas&comma; IGNATOV met with a number of OneCoin affiliates&period; During the meeting&comma; one of the first questions posed to IGNATOV was when OneCoin members would be able to monetize&comma; or &OpenCurlyDoubleQuote;cash out&comma;” their OneCoins&period; IGNATOV reportedly responded&comma; &OpenCurlyDoubleQuote;if you are here to cash out&comma; leave this room now&comma; because you don’t understand what this project is about&period;”<&sol;p>&NewLine;<p>IGNATOVA&comma; a third defendant&comma; MARK S&period; SCOTT&comma; and others agreed to launder the proceeds of the OneCoin fraud scheme&period; Specifically&comma; IGNATOVA&comma; SCOTT&comma; and others agreed with others to conduct transactions involving OneCoin fraud proceeds in order to conceal and disguise the nature&comma; location&comma; source&comma; ownership&comma; and control of the proceeds&period; SCOTT&comma; a former partner of a major United States law firm&comma; assisted IGNATOVA and others in laundering more than &dollar;400 million through a series of purported investment funds holding bank accounts at financial institutions in the Cayman Islands and the Republic of Ireland&comma; among other locations&period; The indictment charging SCOTT was previously unsealed&comma; and SCOTT was arrested in Barnstable&comma; Massachusetts&comma; on September 5&comma; 2018&period; SCOTT’s case is currently pending before U&period;S&period; District Judge Edgardo Ramos&period;<&sol;p>&NewLine;<hr &sol;>&NewLine;<p>IGNATOVA&comma; 38&comma; of Sofia&comma; Bulgaria&comma; is charged with one count each of wire fraud&comma; conspiracy to commit wire fraud&comma; securities fraud&comma; and conspiracy to commit money laundering&comma; each of which carries a maximum sentence of 20 years sentence&comma; and one count of conspiracy to commit securities fraud&comma; which carries a maximum sentence of five years in prison&period; IGNATOVA remains at large&period;<&sol;p>&NewLine;<p>IGNATOV&comma; 33&comma; of Sofia&comma; Bulgaria&comma; is charged by Complaint with one count of conspiracy to commit wire fraud&comma; which carries a maximum sentence of 20 years in prison&period;<&sol;p>&NewLine;<p>SCOTT&comma; 50&comma; of Coral Gables&comma; Florida&comma; is charged by Indictment with one count of conspiracy to commit money laundering&comma; which carries a maximum sentence of 20 years in prison&period;<&sol;p>&NewLine;<p>The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only&comma; as any sentencing of the defendant will be determined by the judge&period;<&sol;p>&NewLine;<p>Mr&period; Berman and Mr&period; Vance praised the outstanding investigative work of IRS-CI and the FBI&comma; which jointly conducted this investigation with the Special Agents from the U&period;S&period; Attorney’s Office and analysts from the New York County DA’s Office Major Economic Crimes Bureau&period;<&sol;p>&NewLine;<p>The prosecution of this case is being handled by the Office’s Complex Frauds and Cybercrime Unit and Securities and Commodities Fraud Task Force&period; Assistant United States Attorneys Christopher J&period; DiMase and Nicholas Folly&comma; and Special Assistant United States Attorney Julieta V&period; Lozano of the New York County District Attorney’s Office&comma; are in charge of the prosecution&period;<&sol;p>&NewLine;<p>The charges contained in the Indictments and Complaint are merely accusations&comma; and the defendants are presumed innocent unless and until proven guilty&period;<&sol;p>&NewLine;<p>If you think you may have been a victim in this case or have additional information&comma; please contact the United States Attorney’s Office at 866-874-8900&comma; or by email at USANYS&period;OneCoin&commat;usa&period;doj&period;gov&period;&Tab;&Tab;&Tab;&Tab;<&sol;p>&NewLine;

Cyber CrimeFinancial Fraud