One of the masterminds behind the notorious One Coin scam has been sentenced to 20 years in prison and ordered to pay $300 million in restitution by a US federal court. Konstantin Ignatov, the co-founder and public face of One Coin, pleaded guilty to several charges, including money laundering, wire fraud, and securities fraud.
One Coin is a controversial cryptocurrency project that has been accused of being a Ponzi scheme by various authorities around the world. The project was founded by Dr. Ruja Ignatova, who disappeared in 2017 and is still wanted by the US authorities for fraud and money laundering charges. One Coin claims to have over 3 million members and a market capitalization of over $4 billion, but these figures are disputed by critics who say that One Coin has no real blockchain, no public ledger, and no exchange where its tokens can be traded.
The scam operated as a multi-level marketing network, where members were incentivized to recruit new investors and sell them educational packages that supposedly contained valuable One Coin tokens. However, these tokens were worthless and not even based on a real blockchain.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
The legal troubles of One Coin began in 2016, when the Bulgarian authorities raided its offices and seized its servers. Since then, several countries have banned or restricted One Coin activities, including China, India, Italy, Germany, Norway, and the UK. Many One Coin promoters and affiliates have been arrested or fined for misleading investors and violating financial regulations.
In 2019, the US authorities indicted several One Coin leaders, including Konstantin Ignatov, the brother of Ruja Ignatova, who pleaded guilty to fraud and money laundering charges and agreed to cooperate with the prosecutors. The trial of Mark Scott, a former lawyer who allegedly helped One Coin launder over $400 million, is ongoing.
The issues with regulators stem from the fact that One Coin operates as a centralized entity that controls the supply and distribution of its tokens, rather than as a decentralized network that relies on cryptography and consensus mechanisms. This means that One Coin can manipulate the price and value of its tokens at will, and that its members have no way of verifying the transactions or the balance of their accounts.
Moreover, One Coin does not comply with the anti-money laundering and consumer protection laws that apply to legitimate cryptocurrency projects. One Coin also uses deceptive marketing tactics to lure unsuspecting investors into buying its educational packages, which supposedly grant access to its tokens, but in reality, are worthless.
According to the US Department of Justice, One Coin generated at least $4 billion in revenue from its fraudulent activities between 2014 and 2019. Ignatov’s sister, Ruja Ignatova, who was the founder and leader of One Coin, remains at large and is wanted by the authorities. She is believed to have fled the country in 2017, shortly before a major event in Lisbon where she was supposed to reveal the new One Coin blockchain.
Ignatov was arrested in March 2019 at Los Angeles International Airport, as he was preparing to board a flight to Bulgaria. He cooperated with the prosecutors and testified against several of his co-conspirators, including Mark Scott, a former lawyer who helped launder hundreds of millions of dollars for One Coin. Scott was convicted in November 2019 and is awaiting sentencing.
The sentencing of Ignatov marks a significant milestone in the ongoing efforts to bring justice to the victims of One Coin and other similar scams. The US Attorney for the Southern District of New York, Audrey Strauss, said in a statement: “As his sentence today shows, we will work tirelessly with our law enforcement partners here and abroad to identify and prosecute those who perpetrate such schemes and hold them accountable for their criminal conduct.”
One Coin is an example of how not to do cryptocurrency. It is a scam that exploits the ignorance and greed of people who want to get rich quick without understanding the risks and complexities involved. It is also a challenge for regulators who have to balance the need to protect consumers from fraud and abuse, while also fostering innovation and competition in the emerging crypto space. The One Coin litigation is likely to continue for years, as more victims come forward and more evidence is uncovered. The fate of Ruja Ignatova remains unknown, but she is unlikely to escape justice forever.