The legal office manager of the OneCoin crypto Ponzi scheme has been sentenced to four years in prison.
The US Department of Justice revealed it on Wednesday with an official statement.
Summary
OneCoin: the scandal of the crypto Ponzi scheme
OneCoin was a Ponzi scheme created back in 2014, the year of the collapse of Mt.Gox and the one preceding the launch of Ethereum, which claimed to be based on a cryptocurrency.
Actually, at its core it didn’t really have a cryptocurrency, but a centralized system completely controlled and managed by its creators.
It was founded in Bulgaria by Ruja Ignatova and Karl Sebastian Greenwood, and already the following year, 2015, the Financial Supervision Commission (FSC) of Bulgaria issued a warning explicitly mentioning the project.
Already in 2016 it was publicly described as a scam, also because it was not difficult at all to understand that it was a Ponzi scheme, given that it was based on a completely obscure centralized system and promised profits to those who entered by investing capital.
The arrest of Ruja Ignatova’s brother, Konstantin Ignatov, however, took place only in 2019, and in those five years OneCoin managed to scam many thousands of people, for a total exceeding 4 billion dollars.
Ruja Ignatova, also known as the CryptoQueen, has been untraceable since 2017.
The conviction
The legal office manager of OneCoin, Irina Dilkinska, was arrested in Bulgaria last March, and then extradited to the USA.
After less than a year of trial, she was sentenced by the judge of the Southern District of New York, Edgardo Ramos, to 4 years in prison for her role in the OneCoin fraud.
The official statement from the Department of Justice announcing the conviction states that OneCoin marketed a fraudulent cryptocurrency of the same name through a global multi-level marketing (MLM) network.
The same Dilkinska, once arrested and accused, had pleaded guilty to criminal association aimed at committing telematic fraud, and to criminal association aimed at money laundering.
Even the founder’s brother had pleaded guilty, once arrested, also because it was practically impossible to hide or deny that OneCoin was a Ponzi scheme, that is, a fraud.
Even co-founder Karl Sebastian Greenwood pleaded guilty in 2022.
However, it is worth noting that Konstantin Ignatov was sentenced to only 34 months in prison, just over half of the 4 years given to Irina Dilkinska, while Greenwood was sentenced to 20 years.
So according to justice, the real culprits are Greenwood and probably Ruja Ignatova, while her brother Konstantin Ignatov and Irina Dilkinska are just accomplices.
The judge also ordered Dilkinska to give up over 111 million dollars likely earned through the OneCoin scam.
The comment
The prosecutor Damian Williams who indicted Dilkinska stated:
“Irina Dilkinska’s involvement in the vast OneCoin pyramid scheme was a blatant violation of conduct. Instead of upholding the law and embracing her position as head of the legal and compliance office, she facilitated and engaged in money laundering, enabling the exploitation of millions of victims. As Dilkinska has learned today, this Office will hold accountable every perpetrator of the OneCoin scheme, no matter where they may hide.”
The reference to Ruja Ignatova is evident, although there has been speculation for some time that she may have been killed and for this reason she would be completely untraceable.
The Department of Justice statement adds that OneCoin operated as an MLM network through which members received commissions for recruiting other members to purchase packages of their “cryptocurrency”.
Thanks to this MLM structure, the OneCoin member network has grown rapidly, and over three million people have ended up buying fraudulent “cryptocurrency” packages.
Between the fourth quarter of 2014 and the fourth quarter of 2016, in other words in two years, OneCoin generated 4.037 billion euros in revenues and “profits” of 2.735 billion euros.
The “crypto” of the Ponzi scheme OneCoin
Although it was defined as a “cryptocurrency”, OneCoin was not actually a cryptocurrency at all.
A cryptocurrency is based on cryptography because its records are public, and access is open to everyone.
Instead, OneCoin has never had a public register, and access was reserved for members who joined the network.
In other words, the “currency” OneCoin was not based on cryptography, and the latter was only used for users to access their accounts on the company’s private and centralized platforms.
In reality, there were two companies, OneCoin Ltd based in Bulgaria and Dubai, and OneLife Network Ltd, based in Belize.
It was a corporate monetary platform that had nothing to do with Bitcoin or with real decentralized cryptocurrencies.
