On March 6th, the US Federal Bureau of Investigation (FBI) arrested OneCoin ringleader Konstantin Ignatov at Los Angeles International Airport (LAX).
The government alleges that he was one of several masterminds behind the multi-billion dollar crypto pyramid scheme.
Everybody Wants To Jail OneCoin Scammers
US authorities charged Ignatov with conspiracy to commit wire fraud. He’s been in the US since February 27th, when customs agents seized his phone and laptop and gathered evidence.
“As a result of misrepresentations that IGNATOV, IGNATOVA and others made about OneCoin, victims invested billions of dollars worldwide in the fraudulent cryptocurrency. Following his arrest, IGNATOV appeared in Magistrate Court in the Central District of California, and was detained on the charge contained in the Complaint.”
Part of the case against Ignatov and Ignatova relates to the fact that they never launched an actual cryptocurrency. Instead, they used a proprietary SQL database to log transactions within the “OneCoin” network. In typical Ponzi fashion, they encouraged people to invest with promises of “guaranteed” profit.
Fake Blockchain Is Part Of Case Against Ignatov
International authorities have been stupefied by the amount of money the scheme has managed to bring in, especially from impoverished regions like Vietnam, where the scam claimed to have some degree of legitimacy.
Ignatov`s indictment reads, in part:
“OneCoin lacks a true, verifiable blockchain that records OneCoin mining by members […] OneCoins are not in fact mined by members.”
The mention of this fact in the indictment makes the case interesting for crypto enthusiasts. By definition, a public blockchain is hard to call a scam, unless there is a premine or other aspects which unduly reward certain participants.
Ignatov says to a co-founder, in one quote:
“As you told me, the network would not work with intelligent people.”
The unnamed co-founder may be a person of interest in the investigation, or may even be co-operating already against Ignatov and Ignatova.
Ignatov`s Arrest Cancels Plans To Be De Facto Leader
To get people to buy more coins last year, Ignatov told inner circle promoters that they would be going public with OneCoin in October 2018.
OneCoin wanted existing investors to buy more of the fake cryptocurrency in anticipation of a price rise. “Going public” never happened, of course.
The scheme specifically targets “idiots” and people who are not “intelligent.” Any cursory search about OneCoin will yield warnings from central banks and numerous reports on the illegitimacy of OneCoin.
This story originally appeared in CCN. Image courtesy of Shutterstock.