The biggest crypto scam in history – One coin explained

The Missing Cryptoqueen Ruja pulled off the world’s biggest scam ever recorded on the crypto market in plain sight. She pulled in believers with a farce to revolutionize the crypto market in a few years, a plan that fooled millions. This article gives a detailed history of this scam.

Who is Ruja Ignatova?

The pioneer of the token, Ruja Ignatova was a Bulgarian-German, and while there is now a great deal of general awareness on the subject, the audience of earlier years was not privy to such knowledge hence a space that boasted of its legitimacy in fraud-resistant activities could be easily exploited.

This lack of knowledge was understood by many fraudsters and led to scams worth billions, the biggest one yet dealt with the OneCoin, a Ponzi scheme carried out by the companies of OneCoin Ltd, and One Life Network Ltd.

What is a Ponzi scheme?

A Ponzi scheme is a type of fraud that works on a certain system. Users are encouraged to invest and pay for certain assets that are promised high returns over a short period, little risks, and bonuses or incentives for bringing in new investors to the scheme. 

History of the OneCoin

The OneCoin is a digital currency created in 2014 when cryptocurrency was a relatively new concept. It made a huge noise on mainstream media with flashy promotions, the coin was said to be the Bitcoin Killer that would make popular coins dormant over time.

The OneCoin company was spearheaded by Ruja Ignatova, her brother Konstantin Ignatov and Sebastian Greenwood.

May. 1980, she was born in Ruse, Bulgaria, and later on, migrated to Germany. She graduated from the University of Oxford where she got her BA and scored a Ph.D. in private international law from the University of Constance.

She drew her inspiration for OneCoin from ‘BigCoin’ and through it met Sebastian Greenwood a man who already specialized in scams. OneCoin wasn’t Ruja’s first rodeo at criminal activities as she was given a suspended sentence of 14 months in Germany on the account of fraud and also had her hand in the BigCoin multilevel market scam. 

How did OneCoin work?

The OneCoin’s success was fueled by charisma, and reassurance hidden beneath a false cryptosystem. Ruja traveled over the world and attended many seminars where she promoted OneCoin and gained investors.

People were tranced by the amazing prospect in returns and the good reports from many sources worked. Many of these investors were people that missed out on the chance to cash in on Bitcoin and would not be denied a second chance at wealth, they ultimately failed to notice the setup. 

Firstly the coin worked on a centralized system in contrast to the decentralized trope most cryptocurrencies used, this meant that authority and information were all uploaded or situated at one place (which was the servers in Bulgaria and Hong Kong). 

The OneCoin did not possess blockchain technology which is a digital receipt that certifies and records crypto transactions over a decentralized network making the data near impossible to be used for criminal intent.

OneCoin in itself was a stationary token, with over 120 billion coins available the token could not be mined or used in transactions on external platforms despite having a wallet but investors held hopes to use it when it hit the market.

The only way the coin was used was in an internal market One Coin Exchange xcoinx, that was exclusive to high-paying investors. The users could exchange their coins for euros with a certain daily limit that hindered transactions. 

Investors were required to purchase instructional and educational materials that were mostly on cryptocurrency, trading, and investing. The packages came with various levels and prices that ranged from 100 to 118,000 euros.

Each package came with a certain amount of privileges and tokens that the investors were told to be mined, but soon they found out that most of the educational materials were plagiarised and the coins couldn’t be used.

Why did investors buy into the idea? 

A Ponzi scheme is like a virus, it is painted with flashy luxurious benefits that are promoted by a charismatic individual and approved by many well-known people as well.

This starts the spread, once one person is hooked to the idea, he gets another to participate and that person gets another and the chain grows. It also felt legitimate as the coin was the second biggest cryptocurrency at the time, slowly catching up on Bitcoin market capitalization.

People saw fool’s gold in the opportunity to acquire a token that would make up for neglecting to purchase Bitcoin, the generally low awareness of how cryptocurrency worked at the time played a part in investors blindly making investments.

Signs that foretold the scam

There were many denotations that the OneCoin was a scheme, cryptocurrency experts saw this and made an appeal that fell on many deaf ears. Some of those signs were:

• The OneCoin’s system and workings were vastly different from the invest and hold style of Bitcoin. It seemed far too similar to an MLM where a referral earned you incentives.
• Blockchain developer Bjorn Bjercke alerted the public to the fact that a big company like OneChain did not know whatsoever of blockchain technology that backbones various cryptocurrencies when they had requested him to create one for them.
• The Vietnamese government also denied ever giving the company the license of being a tradable digital currency in the country, a title that the company initially held claims to.
• Many reputable sources came up with bold statements that insisted that OneCoin was an MLM Ponzi scheme.

How was the scam discovered?

The OneCoin was deeply rooted in over a hundred countries and the investigations began. The OneCoin market was halted for two weeks on March 1, 2016, and later came back functioning as normal but the market was closed the next year on the 1st of January.

In October of 2017, Ruja fled Germany after missing a seminar in Lisbon, her brother took over the operations of the company despite the heavy eyes of prosecutors looming over their activities.

The company operated as normal even after headquarters was raided in January of 2018, they were only stopped when Konstantin Ignatova was arrested.

The founder Ruja is still nowhere to be found, she was last sighted in 2017 in Greece, recently she has been added to the FBI’s most wanted criminal list but has still not been found. Her partner in crime Sebastian Greenwood is currently facing trial.

Conclusion

The OneCoin was the biggest fraud incident ever to occur in the crypto space with over 4 billion dollars ripped from investors through the period of 2014 to 2017.

The scam worked under the guise of a cryptocurrency and was effective due to the progress Bitcoin had made at the time. Like all good crimes, the OneCoin came with its irresistible allure that ensnared unaware prey. How would such a scheme fair in this more enlightened era one wonders

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