A cryptocurrency project called OneCoin was apparently not a functional currency program, but rather a pyramid scheme. The US security authorities have arrested Konstantin Ignatov, the leader of OneCoin alleging him of fraud conspiracy, while his sister- Ruja Ignatov has been charged with money laundering along with wire and securities fraud but still haven’t found her.
Based out of Bulgaria, OneCoin gave commissions to users who convinced others to join OneCoin cryptocurrency. Founded in 2014, there are more than 3 million members worldwide even if it doesn’t have a public ledger or a functional blockchain. Between 2014 and 2016, OneCoin roughly made about revenue of about $3.7 billion.
The New York County District Attorney Cyrus Vance said: “these defendants executed an old-school pyramid scheme on a new-school platform,” in a statement. About 3 years ago, Ruja Ignatov began distributing fake OneCoin tokens for her ‘project’ and called them ‘fake coins.’ When a member asked when they could cash out, the response was a curt one: “if you are here to cash out, leave this room now, because you don’t understand what this project is about.”
The company’s fraudulent activities were seen in many countries including Finland, China, the UK, and Germany. Attempts to curb its activities were done, until the US successfully held the lead. Now, Konstantin Ignatov can face up to 20 years in prison while his sister could add up to a maximum of 85 years in prison if she’s found guilty on all counts, once held.