Latest in Gear

Image credit: Michael Rowley via Getty Images

US arrests cryptocurrency exec over 'multibillion-dollar' fraud

OneCoin was allegedly an elaborate pyramid scheme.
834 Shares
Share
Tweet
Share
Save

Sponsored Links

Michael Rowley via Getty Images

Cryptocurrency scams are nothing new, but they're rarely as large as this. US law enforcement has arrested Konstantin Ignatov over a fraud charge relating to OneCoin, the cryptocurrency he helped found. Ignatov, his sister Ruja Ignatova (also charged, but hiding) and others allegedly orchestrated a "multibillion-dollar pyramid scheme" where people received commissions for persuading people to buy OneCoin packages that themselves were junk. OneCoin reportedly rigged prices, sold people non-existent coins and didn't even have a true blockchain to manage the currency.

OneCoin is still running, and has apparently been very lucrative. The firm made about €2.2 billion ($2.5 billion) in profit just between 2014 and 2016, according to the US Justice Department. A third defendant already charged in the scheme, Mark Scott, was said to have laundered over $400 million through banks in places like the Cayman Islands and Ireland.

All of the culprits could face significant penalties if they're found guilty. Ignatov's lone charge could lead up to 20 years in prison, while Ignatova faces four charges with 20-year maximum sentences and one with five. Scott also faces up to 20 years behind bars.

While the cryptocurrency was ultimately a front, the arrest illustrates the ongoing challenges of policing virtual money. The technology is still young, and officials still aren't sure how to regulate it -- crooks might thrive simply due to a lack of scrutiny. High-profile busts like could help discourage future crypto scams, or at least limit the potential damage.

All products recommended by Engadget are selected by our editorial team, independent of our parent company. Some of our stories include affiliate links. If you buy something through one of these links, we may earn an affiliate commission.
Comment
Comments
Share
834 Shares
Share
Tweet
Share
Save

Popular on Engadget

Engadget's Guide to Privacy

Engadget's Guide to Privacy

View
AMD delays 16-core Ryzen 9 CPU to November

AMD delays 16-core Ryzen 9 CPU to November

View
Erica's modular synth helps you make music with preset cards

Erica's modular synth helps you make music with preset cards

View
TiVo gave its unannounced Edge DVR to a customer

TiVo gave its unannounced Edge DVR to a customer

View
Facebook will shut down Group Stories on September 26th

Facebook will shut down Group Stories on September 26th

View

From around the web

Page 1Page 1ear iconeye iconFill 23text filevr