OneCoin Scheme Collapses

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OneCoin Logo/Advertisement

OneCoin ran a large Ponzi scheme, which successfully tricked investors to invest over $4b USD. There was no blockchain behind the token, and the only way to exchange it to cash was through an exchange which shut down in January 2017. The founder is still at large.

This is a global/international case not involving a specific country.[1][2][3][4][5][6][7][8][9][10][11][12][13][14][15][16][17][18][19][20][21][22][23][24][25]

About OneCoin

OneCoin was a cryptocurrency project founded by Ruja Ignatova in 2014. Ignatova claimed that OneCoin operated like any other cryptocurrency, with the ability to mine the coins and use them for transactions, and even offered an e-wallet. OneCoin was promoted as a legitimate digital currency.

The primary business of OneCoin was not the cryptocurrency itself but the sale of educational materials, including courses on cryptocurrency, trading, and investing.

OneCoin promised its participants that they could exchange their OneCoins for a type of future certificate (OFC) that would later allow them to receive shares in the company once it went public.

Founder Ruja Ignatova had an extravagant lifestyle including a yacht and luxury items.

The Reality

OneCoin was run through offshore companies OneCoin Ltd (based in Dubai) and OneLife Network Ltd (based in Belize).

OneCoin was a Ponzi scheme that operated under the guise of a cryptocurrency. The OneCoin project lacked a true blockchain or payment system, undermining claims from founders. "If you want to know it, they didn’t develop anything new since the times when their crimes were revealed."

Materials sold by the OneCoin project were often criticized for being plagiarized.

The company operated as a multi-level marketing (MLM) scheme, incentivizing participants to recruit others and offering rewards for expanding the network. The only way for users to trade their OneCoins was through the internal OneCoin Exchange, XcoinX, which could be accessed only by purchasing advanced packages beyond the basic entry level. The scam promised massive returns and attracted investors through a feverish marketing campaign.

The company's promise for future certificates (OFC) was part of a broader deception, as OneCoin lacked any real infrastructure or financial backing to ever list on a stock exchange.

"The company was busted in India and some of the European countries." "What makes this ICO one of the top-level scams is that after 2.5 million euro fine in Italy and $30 million fine in China this company keeps existing."

Ruja Ignatova

Ruja Ignatova reportedly had a difficult time making friends, and her relentless pursuit of wealth led her to launch OneCoin[26]. Ignatova's lifestyle was entirely fueled by the funds she scammed from investors.

What Happened

The OneCoin scheme ultimately collapsed in January 2017.

Key Event Timeline - OneCoin Scheme Collapses
Date Event Description
May, 2015 Igor Alberts Joining Sales Team Igor Alberts attends a OneCoin event in Dubai, where he met numerous individuals who were seemingly making huge profits from the cryptocurrency. Dr. Ruja also made a strong impression with her extravagant "princess's dresses" and her bold vision of a financial revolution. Inspired by what he saw, Igor returned with a renewed sense of purpose and gave new directives to his sales team: stop their current activities and focus solely on selling OneCoin. He recalls, "We made in our first month almost €90,000 out of nothing. Bang!"[1]
March 1st, 2016 Maintenance Window Announcement "On 1 March 2016, without notice, OneCoin issued an internal notice that the market would be closed for two weeks for maintenance, explaining that this was necessary due to the high number of miners and for "better integration with blockchain"."
March 15th, 2016 Market Reopened "On 15 March 2016, the market opened again but no visible changes had been made; most of the transactions expired as before and daily limits stayed on."
June 2016 Wembley Arena Gathering Ruja Ignatova captivates a large audience at Wembley Arena, claiming that OneCoin would surpass Bitcoin in value within two years[1].
September 26th, 2016 FCA Issues Warning To Investors The UK's Financial Conduct Authority publishes a notice on their website, which warns the public of the risks of investing in OneCoin[9] and the lack of protections available to investors[9].
January, 2017 Exchange Shuts Down "In January 2017, the exchange was shut down. Leading up to the shutdown, OneCoin denied the majority of withdrawal requests. The exchange was the only way for affiliates to cash out."
March, 2017 Over Four Billion Euros Invested Over €4 billion had been invested in OneCoin, with the scheme reaching countries from Pakistan to the U.S. OneCoin still lacked a crucial component: a functioning blockchain, which underpins legitimate cryptocurrencies like Bitcoin[1].
August 1st, 2017 UK's Financial Conduct Authority Notice Removal The UK FCA removes the notice from their website warning about the OneCoin schemed[9]. They claim it "had been on [their] website for a sufficient amount of time to make investors aware of our concerns". FCA claimed the decision was related to the City of London Police. However, "The City of London Police was made aware of the FCA's intention to take down their alert on OneCoin and their reasons for doing so," said a spokesman. "The force accepted that the decision belonged to the FCA given that this was their alert."[9]
October, 2017 Lisbon, Portugal Meeting Absence "She was on her way. Nobody knew why she wasn't there," recalls one delegate. Frantic calls and messages went unanswered. The head office in Sofia, where she was such an imposing presence, didn't know anything either. Dr Ruja had vanished. Some feared she'd been killed or kidnapped by the banks, who - they'd been told - had most to fear from the cryptocurrency revolution[1].
October 25th, 2017 Ruja Ignatova Ryanair Flight Ruja Ignatova boards a Ryanair flight from Sofia to Athens, which is reportedly the last time that anyone saw or heard from her[1].
December, 2017 Igor Alberts Quits OneCoin Igor Alberts decided to quit OneCoin after realizing that the company could not provide evidence of a functioning blockchain. This decision came after Dr. Ruja Ignatova's disappearance and growing doubts about the legitimacy of the cryptocurrency. When asked if he felt guilty for promoting a non-existent coin and profiting from it, he responded, "I felt responsibility. Not guilt. You can never be blamed for believing in something. I had no idea it could be false. I didn't even know what a blockchain was... What doubt could I have?" He noted he had spent millions buying OneCoin, possibly more than anyone else[1].
August 11th, 2020 5:56:59 AM MDT BBC Publishes OneCoin Article The BBC published an article investigating the OneCoin cryptocurrency scam, focusing on the actions of Dr. Ruja Ignatova, who promised her cryptocurrency would surpass Bitcoin, leading thousands of people to invest billions of pounds[9]. The piece highlights the UK’s Financial Conduct Authority (FCA), which initially warned the public about OneCoin in late 2016 but mysteriously removed the warning in August 2017, sparking controversy. Critics argue that this move allowed OneCoin promoters to falsely claim the FCA no longer considered the scheme a threat. The article raises concerns about the regulatory response and the broader failure of authorities to prevent the fraud, which continued to deceive people for years after the warning was removed[9].
June 30th, 2022 5:11:40 PM MDT Added To FBI Most Wanted List The New York Post reports the addition of Ruja Ignatova to the FBI's most wanted list[27]. Ruja Ignatova is not associated with a terrorist organization. She is wanted by the FBI for charges related to fraud, including wire fraud, money laundering, and securities fraud, in connection with her involvement in the OneCoin cryptocurrency scam[27].
August 10th, 2022 2:06:22 PM MDT New York Post Article Posted The New York Post share and article exploring the life and crimes of Ruja Ignatova, the mastermind behind the OneCoin cryptocurrency scam[26]. Drawing parallels with Elizabeth Holmes of Theranos, Ignatova, a Bulgarian-German, used charm and ambition to convince investors to pour money into her fraudulent scheme. Despite her brilliance, she had a difficult time making friends, and her relentless pursuit of wealth led her to launch OneCoin. The scam, structured as a multi-level marketing platform, promised massive returns and attracted investors through a feverish marketing campaign. Ignatova's extravagant lifestyle, including a yacht and luxury items, was fueled by the billions she scammed from investors. The article details her relationships, including alleged flings, and her eventual disappearance in 2017, leaving her brother, lover, and associates to face legal consequences. Ignatova, now on the FBI's Ten Most Wanted list, faces potential imprisonment for wire fraud, securities fraud, and money laundering. Despite extensive efforts to locate her, including rumors of plastic surgery and the use of aliases, Ignatova remains at large, possibly floating on the seas with newfound anonymity and access to ill-gotten wealth[26].
January 28th, 2023 11:18:46 AM MST New York Post Reports Penthouse Claim The New York Post reports that Ruja Ignatova, the Bulgarian-born German citizen behind the $4 billion OneCoin cryptocurrency Ponzi scheme, has re-emerged after vanishing in 2017[28]. Ignatova, dubbed the "crypto queen," resurfaced when a penthouse she owned in London was listed for sale. Ignatova and her partner Sebastian Greenwood scammed investors by promoting OneCoin as a "Bitcoin killer," vanishing as authorities closed in. Now on the FBI's top 10 most-wanted list, Ignatova claimed ownership of the property under a company name, but a rule change compelled her lawyers to formally declare her as the "beneficial owner." This development may provide crucial clues for authorities pursuing her. Ignatova faces charges of wire fraud, money laundering, and securities fraud.

Technical Details

OneCoin was a sophisticated multi-layered Ponzi scheme.

"The companies behind the scheme was OneCoin Ltd. and OneLife Network Ltd., founded by Bulgarian national Ruja Ignatova"

"People [reportedly] spent millions on [the] ICO despite the fact that OneCoin doesn’t even have a public ledger and official license."

Total Amount Lost

The losses from the OneCoin ponzi scheme are widely estimated at $4b USD.

The total amount lost has been estimated at $4,000,000,000 USD.

Immediate Reactions

"Selling limits were placed on the accounts based on the level of education package purchased."

Ultimate Outcome

Ruja Ignatova ultimately disappeared in 2017. A later New York Post article would detail her relationships, including alleged flings, and her eventual disappearance in 2017, leaving her brother, lover, and associates to face legal consequences[26].

"OneCoin is to blame for the loss of over $30 million in invested funds, making it one of the most widespread cryptocurrencies that were proven to be scams. Unfortunately, the fake cryptocurrency is hard to pin down, as it has made splashes in Vietnam, China, India, Bulgaria, and Italy (just to name a few), without actually being licensed in any of them. Until OneCoin is completely dismantled, many nations are on high alert for signs of the fraudulent organization."

Total Amount Recovered

The total amount recovered has been estimated at $58,000,000 USD.

Ongoing Developments

Ruja Ignatova continues to be wanted.

The Hunt For Ruja Ignatova

Ruja Ignatova faces potential imprisonment on charges of wire fraud, money laundering, and securities fraud and is on the FBI's top 10 most-wanted list[26][27][28]. Despite extensive efforts to locate her, including rumors of plastic surgery and the use of aliases, Ignatova remains at large, possibly floating on the seas with newfound anonymity and access to ill-gotten wealth[26]. Ruja Ignatova is not associated with a terrorist organization[27].

Through legal representation, Ignatova claimed ownership of a penthouse she owned in London, which was listed for sale under a company name. A rule change compelled her lawyers to formally declare her as the "beneficial owner." This development may provide crucial clues for authorities pursuing her[28].

Individual Prevention Policies

No specific policies for individual prevention have yet been identified in this case.

When using any third party custodial platform (such as for trading), it is important to verify that the platform has a full backing of all assets, and that assets have been secured in a proper multi-signature wallet held by several trusted and trained individuals. If this can't be validated, then users should avoid using that platform. Unfortunately, most centralized platforms today still do not provide the level of transparency and third party validation which would be necessary to ensure that assets have been kept secure and properly backed. Therefore, the most effective strategy at present remains to learn proper self custody practices and avoid using any third party custodial platforms whenever possible.

For the full list of how to protect your funds as an individual, check our Prevention Policies for Individuals guide.

Platform Prevention Policies

Policies for platforms to take to prevent this situation have not yet been selected in this case.

Never take for granted the limited knowledge of users of your service and their tendency to skip past provided information. It is recommended to design a simple tutorial and quiz for new users which explains the basics of seed phrases, strong password generation, secure two-factor authentication, common fraud schemes, how ponzi schemes work, as well as other risks which are unique to the cryptocurrency space. This tutorial and quiz should ensure their understanding and be a standard part of the sign-up or download process which is difficult or impossible to skip.

For the full list of how to protect your funds as a financial service, check our Prevention Policies for Platforms guide.

Regulatory Prevention Policies

No specific regulatory policies have yet been identified in this case.

Create a standard tutorial and quiz for all new cryptocurrency participants, which is required to be completed once per participant. This tutorial and quiz should cover the basics of proper seed phrase protection, strong password generation, secure two-factor authentication, common fraud schemes, how to detect and guard against phishing attacks, how ponzi schemes work, as well as other risks which are unique to the cryptocurrency space.

For the full list of regulatory policies that can prevent loss, check our Prevention Policies for Regulators guide.

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Cryptoqueen: How this woman scammed the world, then vanished - BBC (Accessed Dec 12, 2022)
  2. ↑ Cryptocurrencies That Were Proven to Be Scams - The Chain (Accessed Jan 16, 2022)
  3. ↑ ICO Scams Hall of Fame - Evan Ducktator (Accessed Jan 17, 2022)
  4. ↑ OneCoin - Investopedia (Accessed Jan 17, 2022)
  5. ↑ OneCoin - Wikipedia (Accessed Jan 17, 2022)
  6. ↑ Blueprint to a Digital Scam: OneCoin Prepares to 'Go Public' - Bitcoinist (Accessed Jan 17, 2022)
  7. ↑ OneCoin crypto-scam lawyer found guilty of worldwide $400m fraud – Naked Security (Accessed Jan 17, 2022)
  8. ↑ Ruja Ignatova - Wikipedia (Accessed Jan 17, 2022)
  9. ↑ 9.0 9.1 9.2 9.3 9.4 9.5 9.6 Missing Cryptoqueen: Why did the FCA drop its warning about the OneCoin scam? - BBC (Accessed Jan 21, 2022)
  10. ↑ Florida Man Pleads Guilty to Role in $4 Billion OneCoin Fraud - Bloomberg (Accessed Jan 21, 2022)
  11. ↑ !! WARNING !! ONECOIN “BIGGEST CRYPTO SCAM” RUN BY MISSING CRYPTO QUEEN - TRT World (Accessed Jan 21, 2022)
  12. ↑ What We Can Learn From OneCoin, Crypto's Biggest Scam - Fool.com (Accessed Jan 21, 2022)
  13. ↑ Seychelles Police Asked to Probe Transfer of 230K Bitcoin Linked to OneCoin Scam - CoinDesk (Accessed Jan 21, 2022)
  14. ↑ $4B Ponzi Scheme OneCoin and ‘CryptoQueen’ Leader Found in Default in US Lawsuit - CoinDesk (Accessed Jan 21, 2022)
  15. ↑ OneCoin Investors Allege BNY Mellon Aided $4B Fraud - CoinDesk (Accessed Jan 21, 2022)
  16. ↑ OneCoin Took In Billions. Then Its Leader Vanished. - Wall Street Journal (Accessed Jan 21, 2022)
  17. ↑ OneCoin News by CoinTelegraph (Accessed Jan 21, 2022)
  18. ↑ $4B Ponzi Scheme OneCoin and ‘CryptoQueen’ Leader Found in Default in US Lawsuit - Yahoo Finance (Accessed Jan 21, 2022)
  19. ↑ In $4 billion OneCoin fraud, jurisdiction dooms claims against ex-Big Law partner - Reuters (Accessed Jan 21, 2022)
  20. ↑ Image Of Ruja Ignatova - FilmDaily (Accessed Jan 21, 2022)
  21. ↑ The OneCoin Ponzi wall of shame (Accessed Jan 21, 2022)
  22. ↑ Mystery of the disappearing 'Cryptoqueen' Ruja Ignatova - BBC (Accessed Jan 24, 2022)
  23. ↑ Worldwide crypto & NFT rug pulls and scams tracker - Comparitech (Accessed Dec 15, 2022)
  24. ↑ 2019 In Review: Major Blockchain/Crypto Security Incidents | MyCrypto Blog (Accessed Dec 28, 2022)
  25. ↑ BBC Radio 5 Live - The Missing Cryptoqueen - Downloads (Accessed Oct 27, 2023)
  26. ↑ 26.0 26.1 26.2 26.3 26.4 26.5 Inside the life and crimes of the new addition to the FBI’s 10 Most Wanted Ruja Ignatova - New York Post (Dec 28, 2023)
  27. ↑ 27.0 27.1 27.2 27.3 ‘Cryptoqueen’ Ruja Ignatova has been added to FBI’s 10 most wanted list - New York Post (Dec 29, 2023)
  28. ↑ 28.0 28.1 28.2 Missing ‘crypto queen’ Ruja Ignatova found alive after vanishing 5 years ago - New York Post (Mar 1, 2023)
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