Sunday, February 5, 2023

Cocaine, Women and Crime Bosses: How Onecoin Became One of the Biggest Scams in Crypto History

Cocaine, Women and Crime Bosses: How Onecoin Became One of the Biggest Scams in Crypto History

Multiple arrests, criminal investigations, community revolt and the closure of their last remaining bank accounts — the Onecoin saga continues down a well worn path as further details emerge on their attempt to implement an actual blockchain.

Also read: Anonymous Member Launches Decentralized Investigation of FBI

It wasn’t until 2016 that the Bitcoin community really began to take notice of the ponzi scheme known as Onecoin. Relatively unknown in the US, it operated on the periphery, drowned out by bear markets, scaling debates and the fact that scams are a dime a dozen in the cryptocurrency world. With Onecoin, the question has never been whether it is a scam, but for how long the charade could last before eventually imploding.

Long time community members have seen it all before in scams like PayCoin — the grandiose promises that fail to eventuate, the shouting down of dissenting commentary and the glitzy, paid advertisements.

Then, as the ruse becomes increasingly obvious and the scam registers on the radar of authorities, new promises and assurances are given — the proverbial carrot on a stick — attempting to lure new suckers into the scheme and appease existing ones. Ponzi schemes can survive only as long as new money continues to flow in.

‘You Can’t Run Cryptocurrencies on SQL Servers’

By 2016, Onecoin had reached the point where the broken promises of merchant acceptance, exchange listings and “fixed and finite” coin distribution were piling up. Predictably, the company changed things up with the promotion of a new, nonsensical coin split and the surprise October announcement of the live “switching on” of a new, improved “blockchain” at the Bangkok One Life Event.

The real surprise however, turned out not to be the “switching on” of the blockchain, but the fact that unbeknownst to investors, the company had only two days earlier attempted to hire a blockchain developer as CTO, tasking him with implementing an actual, working blockchain.

Norwegian developer Bjorn Bjercke is a blockchain specialist with over 19 years experience in the IT and project management industry. He was contacted by a Japanese recruitment agency with a “very high salary” offer to develop a blockchain. By his own admission, Bjercke was “super keen” but wanted to know which company he would be developing for. The recruiter was hesitant but finally informed Bjorn that the company was Onecoin and that they wanted him to turn their SQL servers into a blockchain.

This confirmed to Bjorn that Onecoin was a scam, as he explained in a recent webinar: “You can’t run cryptocurrencies on SQL servers — you need decentralisation.”

This was an explosive admission considering that Onecoin had been promoting the benefits of its “fixed and finite” blockchain for a number of years. After Bjorn decided to think the offer over, the recruiter stopped returning his calls and he forgot about Onecoin until February 2017, when he noticed the company was promoting itself as “better than Bitcoin.”

Taking Advantage of Blockchain Hype

Knowing the real truth behind it, Bjorn began posting about his experience and set out to show the Onecoin community that no blockchain existed, despite their proclaimations to the contrary. To do this he ran multiple, reproducible tests, internally moving Onecoins around, then highlighting the fact that the transactions did not show up on the supposed Onecoin blockchain.

Over 200 transactions in the system and none of them … ended up in the blockchain.” There were no transaction ID’s, no timestamps. Their “blockchain” was just a “simulative video … nothing to do with reality.”

While Bjorn and others with technical knowledge knew Onecoin was a scam (“it takes us less than three seconds from looking at their website”) many non-technical people didn’t have that luxury and believed what they were being sold.

Onecoin UK affiliate Jen McAdam put €10,000 into Onecoin because of the presence of a blockchain. For her it was the main selling point: “I paid money for packages, as did everybody else, because they thought there was a blockchain.”

Bjorn’s revelation and the publicity it received increased the pressure on Onecoin among its own community and also led to the involvement of the City of London Fraud Investigation Unit.

Bjorn has spent time informing investigators in multiple jurisdictions of the main players in Onecoin and the technical details behind blockchain technology. Until recently, he has not been able to tell his story. As a result UK investigators have advised people to avoid Onecoin, joining a whole list of warnings around the globe, from Poland to China to Italy.

The reality of the situation means it is extremely likely that Jen and many others who invested in Onecoin will never see their money again, serving to highlight what Onecoin actually represents: a tried and tested system of fraud and deception that just happens to be hiding behind the money making hype of “blockchain technology.”

Full-Time Scamming Isn’t Easy

The ones who do make money are the leaders and the early participants who receive commissions from any investors they sign up. In Onecoin parlance, these are the “Black Diamond” and “Blue Diamond” leaders that manage their downline teams, encouraging them to spread the word and recruit more investors.

The ever-growing commissions down the line incentivize everyone to continue perpetuating the fraud for their own financial benefit, sometimes in the face of overwhelming evidence that the leaders make out like bandits, using investor money for their own personal gain.

Dr. Ruja Ignatova seems to be one of these leaders. She has already been convicted of 24 counts of fraud in Germany, stemming from the 2012 bankruptcy of Waltenhofen Steelworks. Ignatova and her father pled guilty to charges of embezzling money from employees and suppliers, bank fraud, fraudulent accounting practices and even attempting to unbolt machinery to ship back to Bulgaria. She received a suspended jail sentence of one year and two months.

This experience didn’t shake Ignatova much. Instead, sometime in 2014 she transitioned into the digital realm. According to Tim Tayshun, a Bitcoin enthusiast who has spent a number of years researching Onecoin, she met with Christian Goebel, a known serial scammer, and Sebastian Greenwood, the man behind scams such as Loopium, Prosper Inc. and SiteTalk.

Soon afterwards they all joined forces with John Ng and Jarle Thorson to set up a Singapore-based ponzi credit scam called BigCoin, riding on the back of the success of Bitcoin. Ignatova became the treasurer using her Crypto Real Investment Trust company (CRIT). The scheme was marketed as “The Future of Money” and was aimed at Chinese investors.

Despite the promises of wealth and largesse, the project stalled and was disbanded in 2014, taking with it $50 million in investor losses.

Yet that was not the end of Ignatova or Greenwood. Recycling almost everything about BigCoin, including the design and marketing materials, they launched the now-infamous Onecoin.

There are no clear estimates as to how many people have been duped into buying the Onecoin packages that allow users to “mine” on a non-existent blockchain. But by 2016 the money was certainly piling up.

Onecoin, Cocaine, and Organized Crime

Much of that money seems to have found its way back to Bulgaria, with evidence showing that over $19 million has been funneled into property deals involving Ruja Ignatova and a host of questionable individuals and companies, including former politicians, well connected businessmen and people with links to organized crime. Bjorn Bjercke comments that some of these individuals are “worse than criminals.”

Some of these people appear to be linked to Onecoin behind the scenes.

While Ruja Ignatova is the face of the company, the myriad of shell companies operated by Onecoin Limited show connections to alleged organized crime figures like Bulgarian “Cocaine King” Hristofos Amanatidis, who was charged in absentia with drug offenses by Bulgarian police and is referred to as the “Cocaine King.”

Charges were later dropped. Amanatidis’ girlfriend went on to assume majority ownership of a company that holds one of Ignatova’s properties as an asset. Furthermore, another ex-girlfriend became a shareholder of a similar company. Months later, Ruja Ignatova returned to take over the company, according to Bulgarian website Capital.

Map of Onecoin linked shell companies. Amanatidis’ company is at far left

Even though the suspicious property purchases were finalized, international scrutiny was increasing in multiple jurisdictions, and the walls seem to be closing in.

In May 2016, a Chinese operation, codenamed Hurricane, arrested and charged three Onecoin affiliates, sequestering $45 million in customer funds in the process. Then in September, three men kidnapped two others in Bangalore after being promised that an investment in Onecoin would double their money inside three months. When neither the profit nor the initial principal was returned, the three men took the law into their own hands.

After being caught, the police also arrested the Onecoin affiliates and charged them with duping.

Trouble in Tanzania

For a company like Onecoin, passing off the problems as affiliate-related is easy. But when your leaders are arrested, things move into a much more serious realm, as happened in Dar-es Salaam in December 2016. The flyers for the Onecoin event in the Tanzanian capital announced that “leaders” such as Christian and Stefan Steinkeller and “IMA’s” such as Daniel Grenon and Judicus Greatness would be in attendance.

According to Tayshun, three weeks before the event the World Bank, in conjunction with Tanzanian authorities, shut down Onecoin’s last remaining bank account at the Bank Of Africa, seizing €10 million in funds. The account was in the name of the wife of Frank Ricketts, founder of the OPN/SiteTalk scam. This came after account shutdowns around the globe, from Italy to India to China.

The Steinkeller Brothers did not end up attending the event and Tayshun believes they sensed trouble in Dar-es-Salaam. Grenon and Greatness did show however, and they were arrested at the event by plain-clothed police and taken to jail, where they spent the night.

As Tayshun writes:

“A conviction for involvement in ponzi fraud carries a minimum 2-5 year mandatory sentence. Therefore, it couldn’t have been cheap for them to be let go, and had they not, it would have been a Onecoin publicity nightmare, as Grenon, particularly, has been a pretty big name in MLM earners and Onecoin.”

Even with multiple police investigations underway across the globe, nabbing the ringleaders will prove a difficult task. Shell companies are notoriously opaque structures that allow directors to remain virtually anonymous. And by using multiple companies in various locations, the business structure becomes so complex that in many cases law enforcement lack the time, manpower and resources to unravel it. Additionally, co-operation between countries from different jurisdictions, that operate under different laws and regulations, rarely proceeds smoothly and has long been an impediment that allows criminals to remain active.

But that is not the case for the lower level leaders. The two highest ranking UK affiliates, Moyn and Monir Islam, who recently abandoned Onecoin and their 26,000 strong downline team, are on the radar on the UK investigation, as Bjorn Bjercke mentioned during the recent webinar:

“The Islam brothers know the police have their names … they’ve been funding a criminal network, because that is what this is.”

McAdam also took the brothers to task for their failure to pass on information regarding concerns that Black Diamond leaders had about Onecoin and the fact that Dr Ruja had not turned up for a scheduled meeting, sending a compliance team instead.

Soon after the missed meeting the Islam brothers left Onecoin, saying, “It is important that you understand that we don’t believe in OneLife as building a long-term network marketing business, however we believe in Onecoin (because that’s where our money is tied up).”

They allegedly also tried to poach several Onecoin users for a new scheme. In response to McAdam’s allegations, Moyn Islam replied that they had not informed their teams because ”we had expenses” to cover.

The Scam Marches On

Dr. Ruja Ignatova, the face of Onecoin

This leaves Onecoin is an increasingly precarious position, without bank accounts and with multiple active investigations underway. Most recently, on April 18, the German Federal Financial Supervisory Authority (BaFin) ordered Onecoin to “immediately cease business activities in Germany.”

But this has not stopped the scheme from continuing on with new promises. Ignatova recently released a new video explaining that Onecoin is working towards an IPO launch in 2018 and then commenting that the Onecoin exchange (that has never been operational) “will be closed to prepare for the IPO.”

The promise of an IPO is one that insiders like Sebastian Greenwood would know well, as he was involved with Frank Ricketts in the OPN/SiteTalk IPO. Ricketts is the man whose wife held the Onecoin-linked account shut down in Tanzania, and investors in his Opportunity Network were promised that their shares in the scheme had real word value. However, the scheduled IPO failed to meet requirements.

It was later re-listed in Cyprus using another company and the price immediately plummeted, and remains at around 2 cents.

Seeing as though Onecoin bought out the OPN client base (among many other acquisitions) it may be safe to assume that an IPO may be used as a way to legitimize Onecoin. If it follows the path of OPN, investors will have their “shares” but the price will tank.

That won’t be a problem for Ignatova and her cronies, though. Flush with ill-gotten wealth, they have already made out like the bandits they are.

Has anyone you know fallen victim to the Onecoin scam? Let us know in the comments below.

Images via Pixabay,, WatsUpAsia

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