As the crypto market is crashing, let's take a look at one of the oldest crypto Ponzi schemes from 2016 — how did it get so big, and why did so many people buy OneCoin?
It is the summer of 2016.
Imagine yourself among 90,000 cheering fans in London’s packed Wembley Stadium. But you are not there to cheer for a team in a sporting event, or sing along a megastar’s lyrics at a concert.
You are attending the event of Dr. Ruja Ignatova, the CEO of OneCoin, the world’s second-largest cryptocurrency by market capitalization.
Watch the following video until minute 8:35:
Does it sound like a good investment opportunity to you?
It did to millions of people.
This is the astounding story of the biggest crypto scam in history: the OneCoin Ponzi scheme. Probably the most influential crypto scam to date, the story of OneCoin is not one that you tell quickly. CMC Academy broke it down into the following parts:
- What was the OneCoin scam?
- Who was behind OneCoin?
- How did OneCoin scam people for billions of dollars?
- Why was OneCoin so successful?
- How was the scam revealed?
- Who were the victims of OneCoin?
- What happened to the OneCoin scammers?
Each part of the story contains a visual summary at the beginning. However, to fully comprehend this mind-boggling story of greed, deceit and murder, we recommend you read each part's full text and media versions.
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What Was the OneCoin Scam?
When Dr. Ruja Ignatova stepped on the stage in the Wembley Stadium in June 2016, OneCoin already had been on the market for more than 18 months.
Founded in late 2014, the OneCoin promo materials positioned it as the next big cryptocurrency and a "better Bitcoin." OneCoin indeed became big — at the time of Ms. Ignatova's appearance in Wembley, its market capitalization was more than 50% of that of Bitcoin. However, it was not a better Bitcoin, but a gigantic Ponzi scheme hidden behind some multi-level marketing (MLM) techniques.
OneCoin promised all the buzzwords that cryptocurrencies back then (and still today) throw around to gain credibility:
- Safe transactions…
- Easy to use…
- Cheap and time-saving…
Buyers could mine OneCoins, which would eventually hit the market and revolutionize global payments.
In reality, though, OneCoin was never worth anything. The supposed blockchain behind the coins never existed (more on that later). The coins users mined could never be traded outside of its website.
OneCoin made money selling educational materials and using its cryptocurrency as a marketing vehicle. Ms. Ignatova stressed the importance of "education" herself at Wembley (watch for 60 seconds):
We will get to the details of how OneCoin scammed its users a bit later, but safe to say that it worked incredibly well. The OneCoin scam is accused of defrauding users of between $4 and $15 billion.
However, OneCoin was accused of being an MLM Ponzi even before it officially crashed. In 2015, Cointelegraph wrote:
> "The amount of evidence contributing to OneCoin’s status as a pyramid scheme is considerable. Its directors have previously been involved in other known scam operations, its resources contain no verifiable evidence for any of its business claims and documentation uploaded to support claims often conflicts with the claims themselves."
The OneCoin scam became so big that several central banks warned against investing in it, such as the Croatian National Bank in 2017, and the central banks of Latvia, Sweden and Norway in 2016. In 2017, Germany's Federal Financial Supervisory Authority issued cease and desist orders to OneCoin. The same year, Ruja Ignatova disappeared.
The Bulgarian police eventually raided OneCoin's headquarters in Sofia, Bulgaria in January 2018. Ms. Ignatova's co-founder Sebastian Greenwood and her brother Konstantin Ignatov were arrested in 2018 and 2019 respectively. OneCoin ceased to exist in 2019, although lawsuits and investigations continue to this day.
But OneCoin's pivotal founder, Dr. Ruja Ignatova, has been lost without trace for more than four years.
Who is she, and what happened to her?
Who Was Behind OneCoin?
The Missing Cryptoqueen — as Ruja Ignatova was dubbed in a BBC podcast series about the OneCoin scam — is most probably the owner of a $17.75 million penthouse in London's fancy Kensington district. That was revealed during a money-laundering trial against her German lawyer, Martin Breidenbach, in late 2021. However, although Dr. Ignatova planned to settle down in London (she celebrated her 36th birthday at the Victoria & Albert Museum in 2016), the house has been mostly empty since she vanished in late October 2017.
Ruja Ignatova's beginnings were more humble. Born in May 1980 in Bulgaria, her family emigrated to Schramberg, Germany when Ruja was ten years old. Even at a young age, she seemed to have a knack for the extravagant and luxurious: her former classmates say Ruja never came to school without red lipstick and her nails done.
Ignatova graduated with a PhD in International Law from the University of Konstanz in 2006. According to the BBC, Ms. Ignatova's ex-husband was German and a lawyer for Linklaters, a multinational law firm headquartered in London. The two even had a daughter together in late 2016.
But Dr. Ignatova must have had bigger plans for her future than a secure upper-middle-class lifestyle in Germany. After an alleged stint at McKinsey in Bulgaria, she "saved" a German machinery company in 2012. That was at least the side of the story presented in her resume. But after “saving the company” from bankruptcy and re-selling it, the new owners had to file bankruptcy again, as Ignatova and her father had plundered the company for its assets. Both were convicted of fraud and were given a suspended prison sentence.
In 2014, Ruja struck scammer's gold with her launch of OneCoin alongside the two other key personas in this story: Sebastian Greenwood and her brother Konstantin Ignatov. Ignatova knew Greenwood from her “trial scam” BigCoin, which was a sort of alpha version of the OneCoin scam. Many of the schemes and scam dynamics used in BigCoin were later recycled for OneCoin.
Mr. Greenwood was a seasoned scammer. According to Cointelegraph, he had launched a pyramid scheme hiding behind MLM practices called Unaico before OneCoin. Even though Greenwood features in all the summaries of the OneCoin drama, his exact role beyond being the "public face of OneCoin" remains unclear.
Ruja had a knack for glitz and glam and received world-famous pop stars for private concerts on her yacht:
But Konstantin is described as a more down-to-earth guy and a womanizer, who has several women in different cities waiting for him. Others say he was just a "useful idiot" who played an important role but did not mastermind the scam.
During his testimony against his sister, he pleaded guilty to having run the OneCoin scam since she disappeared. It remains unclear if and what he knows of his sister's disappearing act and whether he was in on it. According to Ignatov himself, the last information he has is that his sister was tired of the project's "haters."
Still, crypto scams are a dime a dozen. Just how exactly did OneCoin go from a run-of-the-mill rug pull to a cult that scammed people for billions of dollars?
How Did OneCoin Scam People for Billions of Dollars?
A short answer: identifying people's weak spots (greed) and using a lack of technical understanding to exploit them.
A long answer reveals how Dr. Ignatova's scheme was always conceptualized according to the following exit strategy: "Take the money and run, and blame someone else."
To understand why the OneCoin scam worked, we have to return to a simpler time of cryptocurrencies. One where Bitcoin was trading just above $500, Litecoin was still a top-five coin and utility largely revolved around using crypto on the dark web. Although many coins promised the same as OneCoin (simple payments! cheap! secure!), none had the marketing pull of a charismatic woman with a PhD and work experience at top consultancies. Dr. Ignatova even appeared in the Bulgarian version of Forbes. How could she not be legit?
Of course, the cover was only a paid-for advertisement. But the siren songs of easy riches for those that missed the Bitcoin train (it went from 0 to over $500!) were just too tempting. The monetization of the scheme was disarmingly simple: sell "educational packages" about cryptocurrency, enabling you to:
a) be an informed investor and;
b) mine the OneCoins that will later skyrocket in value.
It goes without saying that the packages came with fancy names and had almost no upper limit in terms of pricing.
Later, even more expensive packages were thrown on the market, with costs as high as €225,000!
However, the coins were never available for public trading. Although they had a nominal internal value on the OneCoin site, users could not cash out and could only transfer their coins in limited quantities within the closed system. Behind MLM, a website uncovering MLM scams, detailed an example of how a restaurant in 2016 was willing to accept OneCoins for a meal — but at only 0.16% of their nominal value. A meal that cost £13.99 GBP could be paid with 1,399 OneCoins, which were worth £8,572 GBP, according to the website.
But there was much behind OneCoin beyond crypto courses with plagiarized content. What allowed the scam to grow into the billions?
Why Was OneCoin So Successful?
The BBC piece "The Missing Cryptoqueen" gives an insight into what attracted investors to OneCoin in the first place:
> "Investors often told us that what drew them in initially was the fear that they would miss out on the next big thing. They'd read, with envy, the stories of people striking gold with Bitcoin and thought OneCoin was a second chance. Many were struck by the personality and persuasiveness of the "visionary" Dr Ruja. Investors might not have understood the technology, but they could see her talking to huge audiences, or at the Economist conference. They were shown photographs of her numerous degrees, and copies of Forbes magazine with her portrait on the front cover."
But the authority and tech smoke screen are only half the story. What also brought the victims in was a sense of community. OneCoin was for the believers, a second chance for those that missed Bitcoin but still understood that cryptocurrencies were revolutionary. It was a bonafide cult.
Nowhere was this more obvious than in the example of Jen McAdam, a Scotswoman whose investment into OneCoin and the eventual revelation that it was a scam made headlines in the UK.
She remembers tuning into a OneCoin webinar and being blown away by the "very up-tempo, full of beans, full of passion" style of the presenters. She invested €10,000 of her own money and persuaded friends and family to invest €250,000 of theirs. But a few months later, Jen received a message from Tim Curry, a Bitcoin enthusiast that was educating people about the scammy practices of OneCoin.
After months, Jen started asking questions. After persisting, she eventually found out that there was no blockchain at all behind OneCoin. It was all based on an SQL server, which was no blockchain at all, something Jen understood at that point.
(In an ongoing court case, it was revealed that OneCoin indeed did have a blockchain, if only a very basic private blockchain that was likely not used for transactions).
Even though the riches lured people like Jen in, the cult-like aspects knocked out her critical thinking. She recalls in a BBC interview:
> "You're told not to believe anything from the 'outside world,'" she recalls. "That's what they call it. 'Haters' - Bitcoiners are 'haters.' Even Google - 'Don't listen to Google!'" Any criticism or awkward questions were actively discouraged. "If you have any negativity you should not be in this group."
But just how successful was the OneCoin scam?
Highly successful, according to different estimates. Cointelegraph quotes sales revenues between $4.4 and $19.4 billion. The BBC attained quarterly revenue numbers detailing nine-figure sums for months on end.
Just last year, law enforcement in the Seychelles were asked to look into transactions of 230,000 Bitcoin rumored to be connected to the scam.
But even though Ponzi scheme allegations surfaced in 2015 already, OneCoin only stopped operating in 2019. Why?
How Was the OneCoin Scam Revealed?
If a highly punctual person is late, you start wondering what happened to them. But if they don't show up at all, something is likely wrong.
That was also the case for Ruja Ignatova's no-show at a convention of OneCoin promoters in Lisbon in October 2017. The indoctrinated promoters feared that her boss had been killed or abducted by their enemies — the banks. But according to a BBC report, court documents revealed that the mastermind behind OneCoin boarded a flight from Sofia to Athens two weeks after the Lisbon event. Her whereabouts in those two weeks remain a mystery, and that is where her trace gets lost.
With Dr. Ignatova hiding underground, it was her brother's turn to take over. Even though the Bulgarian authorities raided the headquarters of OneCoin in early 2018 at the request of German prosecutors, the scam website continued operating.
By that time, warnings of OneCoin being a scam were widespread. Famously, Björn Bjercke, a blockchain developer, had been contacted by the OneCoin team to build a blockchain for them. He explained how the team did not have a clue about blockchain technology and warned people about investing in OneCoin.
But the scam only really stopped after Konstantin Ignatov was arrested in March 2019 in Los Angeles. He later pleaded guilty and went into witness protection. The OneCoin site closed in December 2019.
Jen McAdams was only one example of a victim of this scam. But OneCoin was a global Ponzi, and the victims of the scam spread from affluent Amsterdam neighborhoods to Ugandan slums.
Who Were the Victims of OneCoin?
The Missing Cryptoqueen podcast visited victims of the scam from around the globe. Some of the allegedly 3.5 million users were thousands of kilometers apart.
Igor Alberts and Andrea Cimbala are experienced and successful MLM practitioners, living in a posh Amsterdam neighborhood. When the two of them attended their first OneCoin conference in May 2015, they made €90,000 in their first month.
While multi-level-marketing gets a bad rap due to ubiquitous scammers, it is not strictly illegal. Mr. Alberts perfected his MLM skills before joining the OneCoin cult and found it easy to put them to work with an audience eager for easy money. Soon, they were making €2 million per month and used some of the money to buy more OneCoins, as they pursued greater riches. Alberts even made plans for how many OneCoins he needed to become a billionaire.
The BBC describes how Dr. Ignatova pulled off the perfect evil genius plan: using the established sales channels of existing MLM marketers for her fake product. But when she disappeared, Igor Alberts asked for evidence of the promised blockchains. It was in vain, and he quit in December 2017:
> "I felt responsibility. Not guilt [...] You can never be blamed for believing in something. I had no clue that it could be false. I didn't even know what is a blockchain… What doubt can I have?"
At the opposite end of the spectrum, the reporters revealed the story of Daniel Lienhardt, a 22-year-old Ugandan that invested $250 in a OneCoin starter package.
The reporters visit the slum Daniel and the OneCoin promoter Prudence, who had signed him up, live in. Daniel sold three goats and his savings to get in on the scam in 2017. At that point, Europe was turning over less money for OneCoin, but developing nations were still going strong. At the time the podcast detailing the scam came out in 2019, both Daniel and Prudence — who had stopped investing in OneCoin — still had not told their victims the money was gone for good:
>"I'm somehow hiding myself. I don't want those people I introduced into OneCoin to see me moving around. They can easily kill me. They thought I ate their money."
Even his mother was still unaware of what had happened to their investment.
Jen McAdam, the woman from Glasgow that raised mainstream awareness for the scam, was working with other victims on exposing the scam and recovering funds:
> "For 3 years now myself and a network of people globally have been exposing the OneCoin Scam and working with authorities globally. My personal focus has also been to focus on justice for the victims. This includes helping and supporting victims globally, raising awareness focusing on and speaking to media globally, participating and working with the BBC regarding the BBC successful podcast The Missing Cryptoqueen."
One final question remains: what happened to Ruja Ignatova and her accomplices?
What Happened to the OneCoin Scammers?
Sebastian Greenwood, the prolific scammer and "face of the brand" has been indicted and is being held at a New York prison for the duration of his trial. Last year, he was found to have moved $20 million from a smuggled phone he received.
Konstantin Ignatov pleaded guilty and revealed that his sister had fears of being tipped off to the feds before disappearing. According to him, Ruja Ignatova had gotten hold of a "big passport" and asked for plane tickets to Vienna and Athens before disappearing. However, despite going into witness protection, Ignatov provably lied on two accounts during the trial. A German news report from February 2022 found messages from different women, alluding that Ignatov is most likely behind bars again and may have lost his value as the crown witness against other malefactors in the case.
There are several trials ongoing in Germany against lawyers that cooperated with Dr. Ignatova. However, none of them have been concluded as of April 2022.
The Missing Cryptoqueen podcast did the most detailed digging into Ruja Ignatova's whereabouts so far. Rumors they uncovered include her having Russian and Ukrainian passports and traveling between Russia and Dubai. Another one says she may be hiding in plain sight thanks to plastic surgery.
The BBC reporters hired a private investigator, who claimed to have received information from colleagues that Dr. Ignatova was moving around restaurants in Athens. They also visited the infamous OneCoin beauty pageant, which the doctor was rumored to have attended, but were not able to identify her. Unlike the OneCoin websites, Miss Onelife is still online and even lists OneLife, the marketing arm of the scam, among its gold sponsors.
Another trail led the reporters to Frankfurt, where Ruja's ex-husband lives. However, despite receiving information from "a trusted source" that Dr. Ignatova indeed spends time in Frankfurt, they were unable to locate her.
Whether Ruja Ignatova will ever resurface is questionable. In 2021, OneCoin was linked to terrorism financing:
On May 11, 2021, Inner City Press received a phone message and then an email, about a law suit filed about OneCoin and Ruja and Bitcoin - and now this, "shows that "Cryptoqueen" Ruja Ignatova may be under the protection of a powerful state sponsor of terror in the Middle East.
[...]
The document warned that Ruja Ignatova's OneCoin was a front for terrorism financing.
[...]
Ruja Ignatova entered the United Arab Emirates using a diplomatic passport through Dubai International Airport by a private plane and in possession of a large sum of money.
[...]
Ignatova used accounts at Mashreq Bank to launder money for terrorist groups and made several bank transfers to Afghanistan, Pakistan, and Yemen, which included terrorist organizations. Kuwaiti Intelligence believed Ignatova was working for an unnamed state sponsor of terrorism.
The Epilogue
Of all the crypto scams and crypto Ponzi schemes, OneCoin is the worst, yet most fascinating case.
Honorable mentions of side plots around the main story are:
- A OneCoin promoter starting a new Ponzi with his contacts.
- Two OneCoin promoters killed by Mexican drug cartels.
- An upcoming TV show based on the BBC podcast.
- An upcoming movie starring Kate Winslet as Ruja Ignatova.
And last but not least, a deep fake with an "official statement" by Ruja Ignatova, claiming OneCoin is resuming its work:
We hope you had as much fun reading this story as we had writing it, and remember: if it's too good to be true, it's probably a scam.
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