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US Indicts KARL SEBASTIAN GREENWOOD Co-Founder of OneCoin Ponzi Scheme

17/04/2020

Federal prosecutors in Manhattan have brought fraud charges against the co-founder of a cryptocurrency scheme that allegedly defrauded would-be investors of as much as US$16 billion, but experts warn there is still a long way to go before justice is brought to the victims of the scam.

In an indictment filed on February 6, 2018, unsealed last week, the US Justice Department alleges that KARL SEBASTIAN GREENWOOD personally conspired with several others to embezzle at least $1 billion through fraudulent sales of the cryptocurrency OneCoin.

Read the indictment filed on February 6, 2018 - https://www.courtlistener.com/recap/gov.uscourts.nysd.535589/gov.uscourts.nysd.535589.265.0.pdf

Case prosecutors noted:

  • “GREENWOOD, and others working on his behalf, made and caused to be made false statements and misrepresentations soliciting individuals throughout the world, including in the Southern District of New York,
  • to invest in ‘OneCoin’ a purported cryptocurrency, and instructed individuals to transmit investment funds to OneCoin depository accounts in order to purchase OneCoin packages,
  • thereby causing individuals to send interstate and international wires representing their OneCoin investments, and
  • resulting in the receipt of over $1 billion of investor funds into OneCoin[-]related bank accounts.”

Other individuals allegedly involved in the billion-dollar scam include Ruja Ignatova and Konstantin Ignatov.

They’ve both been indicted by US prosecutors; however, Ruja Ignatova still remains at large. Her brother Ignatov was taken into police custody in March 2018, after he was formally charged.

Manhattan US Attorney Geoffrey S. Berman stated (at the time of the indictment):

  • “As alleged, these defendants created a multi-billion dollar ‘cryptocurrency’ company based completely on lies and deceit. They promised big returns and minimal risk, but, as alleged, this business was a pyramid scheme based on smoke and mirrors more than zeroes and ones,”

Nikolay Stoyanov, a Bulgarian investigative journalist who has been following the case closely, says that the saga is far from over.

He told OCCRP on Wednesday that while it is likely that Greenwood and other suspects are cooperating with US investigators, there is no guarantee that the alleged mastermind of the scheme, the fugitive ‘crypto-queen’ Ruja Ignatova, is even alive.

  • “While cooperation may increase the likelihood of finding out if she is alive, where she is hiding and getting back some of the money that was stolen, it won’t necessarily increase the likelihood of bringing her to justice,” he said.

Much of the story behind the OneCoin scam, described by the Justice Department as “an old-school pyramid scheme on a new-school platform,” remains shrouded in mystery.

At its height, the company claimed to have more than three million members worldwide.

US prosecutors allege that the company established its cryptocurrency “for the sole purpose of defrauding investors.”

While other cryptocurrencies maintain systems that make it impossible to alter the value of the virtual coins, OneCoin allegedly determined the value of its currency internally.

Prosecutors say that this enabled the company to create a false impression of increased value so as to drive further sales, robbing investors of at least $4 billion between 2014 and 2018.

However, documents seen by investigative reporters at the BBC reportedly suggest that the actual value of the scheme may have been far higher, with investors defrauded out of as much as $16 billion worldwide.

Read more at OCCRP https://www.occrp.org/en/daily/12109-us-indicts-co-founder-of-onecoin-ponzi-scheme / https://www.crowdfundinsider.com/2020/04/160034-us-federal-court-unseals-indictment-against-billion-dollar-onecoin-cryptocurrency-pyramid-scheme-promoter/