Here's how an accused crypto fraudster known as the 'CryptoQueen' allegedly started a $4 billion Ponzi scheme and went on the run with 230,000 bitcoin

Advertisement
Here's how an accused crypto fraudster known as the 'CryptoQueen' allegedly started a $4 billion Ponzi scheme and went on the run with 230,000 bitcoin
OneCoin event in Wembley, London.Youtube.
  • Ruja Ignatova is the co-founder of the now-defunct OneCoin, and is known as the "CryptoQueen."
  • Ignatova allegedly operated a Ponzi scheme that took $4 billion from investors.
  • She's now on the run from the FBI and is reported to have $500 million and 230,000 bitcoin.
On June 11, 2016, Ruja Ignatova walked onto the stage at The SSE Arena in London to hundreds of cheering fans as pyrotechnics went off and "Girl is on Fire" by Alicia Keys played in the background.

The self-proclaimed "CryptoQueen" had arrived, and everyone who followed her wise words was soon to find enormous wealth - or so they thought.

It turns out the CryptoQueen was already a convicted fraudster, and she was allegedly at it again. But this time Ignatova was going to take billions.

Advertisement

The CryptoQueen's background

Ruja Ignatova was born in Sofia, Bulgaria, but moved to Germany with her family when she was just ten years old. She went on to earn a Ph.D. in European private law from the University of Konstanz in 2005.

Now, though, Ignatova isn't known as a renowned legal scholar; she's known as the founder of one of the biggest alleged scams in cryptocurrency history: OneCoin.

OneCoin wasn't Ignaotova's questionable dealing. By this time, the CryptoQueen had already been convicted of fraud and was known to be involved with multi-level marketing schemes.

Advertisement

In 2012, Ruja Ignatova was convicted of fraud in Germany in connection with a company that was declared bankrupt in dubious circumstances shortly after she acquired the firm. She was given a 14-month suspended sentence for the crime.

Ignatova had also been previously involved in a failed multi-level marketing scheme called BigCoin, but OneCoin was set to be the CryptoQueen's pride and joy.

Read more: 'Wolf of All Streets' crypto trader Scott Melker breaks down his strategy for making money using 'HODLing' and 100X trade opportunities - and shares 5 under-the-radar tokens he thinks could explode

Advertisement

The Alleged Ponzi scheme

Ruja Ignatova started OneCoin in 2014 with Sebastian Greenwood, who has spent the last few years in jail on several charges related to defrauding investors and was last reported to be in plea deal talks with Manhattan prosecutors.

The cryptocurrency was supposed to be a "bitcoin killer," but in reality, investigators have said the project never used any type of blockchain technology.

According to the Justice Department, OneCoin accounts took in some $4 billion from the fourth quarter of 2014 to the third quarter of 2016, sucking in wealthy investors from around the world using multi-level marketing scheme ploys to prop up their faux crypto.

Advertisement
Investors were encouraged to recruit friends and family into the OneCoin community through small commissions on any funds they could secure to invest.

Ignatova held conferences around the world, marketing her new "bitcoin killer" at lavish events in places like London and Dubai.

From the start, regulators sensed something was off. Bulgaria's Financial Supervision Commission (FSC) warned of risks involved with cryptocurrencies like OneCoin in 2015 when the cryptocurrency was just getting started.

Advertisement
From there, in 2016, authorities in Croatia, Sweden, Norway, Latvia, Hungary, Italy, and several other nations all began to warn investors or crackdown on OneCoin in their countries.

It wasn't until 2017, when India charged Ignatova with duping investors and began arresting OneCoin employees, that it truly began to unravel, however. The CryptoQueen stepped down as CEO of OneCoin in March of 2017 and proceeded to go on the run. She's currently wanted by the FBI.

In 2018, Bulgarian prosecutors along with Europol officers raided OneCoin offices in Sofia, and the end of the OneCoin saga became official.

Advertisement
In early 2019, Ignatova was charged in absentia by US authorities for wire fraud, securities fraud, and money laundering.

Mark Scott, a lawyer who worked for OneCoin, was convicted in federal court of laundering $400 million in 2019, while Ruja's brother, Konstantin Ignatova, who took over the company after the CryptoQueen disappeared, was arrested in 2019 and later plead guilty to several charges, including money laundering and fraud.

Konstantin is reportedly assisting US authorities as a part of a plea deal.

Advertisement

On the run with $500 million and 230,000 bitcoin

Following the creation of OneCoin, Ruja and fellow executives purchased millions of dollars worth of real estate across the world and lived like royalty. When the party came crashing down, most execs, except the CryptoQueen, lost it all.

In 2019, Konstantin Ignatova testified that his sister made off with $500 million after the OneCoin blowup.

Now though, a lawsuit filed by the Cryptocurrency Resolution Trust against "onecoinico.io" on April 27th, 2021, indicates the CryptoQueen might also have a stash of some 230,000 bitcoin worth roughly $10 billion at current prices.

Advertisement
Documents filed in the British Indian Ocean Territory Supreme Court indicate the CryptoQueen obtained 230,000 bitcoin from Sheik Saoud, the son of one of the wealthiest individuals in Dubai. Sheikh Saoud reportedly purchased OneCoin's assets in exchange for 230,000 bitcoin on October 1, 2015, when the coins were worth $50 million.

Pictures obtained by Behind MLM show the CryptoQueen's relationship with Sheik Saoud may have made it easier for her to evade the FBI and travel abroad.

Saoud is the Secretary-General of the Intergovernmental Collaborative Action Fund for Excellence (ICAFE), a New York non profit corporation which issued "diplomatic credentials" to Ignatova.

Advertisement

Recent updates

Victims of the CryptoQueen have made their way to federal courts in New York and pushed for a certificate of default against Ruja Ignatova and financier Gilbert Armenta, and on May 17, the Court granted their request.

"Regulators seems oblivious to the fact the cryptocurrency's main purpose is to facilitate and reward criminals like Ruja Ignatova. It is no coincidence that Ignatova is the main beneficiary of the Bitcoin bubble", said Dr. Jonathan Levy, an attorney for the Cryptocurrency Resolution Trust, per Finance Feeds.

"The winners are clearly the bad guys: organized crime, money launderers, and market manipulators while the small-timers are continually defrauded, hacked, and abused," he added.

Advertisement
The CryptoQueen remains on the run from authorities and hasn't been seen publicly since October of 2017.

For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.

SEE ALSO:
Investments in crypto hit a new record of $17 billion, but Indian funds are yet to jump on the bandwagon

Chiacoin claims to be an eco-friendly cryptocurrency — here's how it works

Is a ban on cryptocurrencies even possible?

Even as Latin America embraces Bitcoin, Southeast Asia is clamping down on cryptocurrencies

{{}}