The U.S. authorities’ investigations into the OneCoin crypto-Ponzi scheme and the indictment of Ruja Ignatova, her brother Konstantin Ignatov and their U.S. attorney Mark S. Scott have uncovered some of the scheme’s financial numbers from the 4th quarter of 2014 to the 3rd quarter of 2016. For these first two years, the U.S. authorities have reported sales of €3,353 billion and a profit of €2,232 billion. This was before the notorious crypto hype in 2017 took off. The OneCoin scheme is still alive today. FinTelegram has taken a closer look at the scheme’s financial impact.
The European Ponzi Scheme disguised as a financial revolution
The Bulgarian crypto Ponzi scheme OneCoin was founded sometime in early 2014. The recorded founders were Ruja Ignatova from Bulgaria and Sebastian Greenwood from Sweden (read more on Sebastian Greenwood here). In April 2014, the duo founded OneCoin Ltd. In the almost six years of its existence, the OneCoin scheme and its messianic Cryptoqueen “Dr. Ruja” have stolen many billions from naive retail investors around the world. Nobody really knows how many billion were stolen. Some experts place OneCoin in the hands of Bernie Madoff (see Wikipedia entry), who allegedly swindled almost $65 billion of investors and produced a total loss of $19.5 billion.
Both founders, Ignatova and Greenwood, retired from OneCoin in 2017. Sebastian Greenwood was arrested in Thailand at the end of 2018 and extradited to the United States. Dr. Ruja, who is indicted with her brother Konstantin Ignatov in the United States, is still at large. She vanished in October 2017 already.
Estimated total loss since OneCoin inception in 2014
In a very rough estimate of the OneCoin scheme’s total amount of raised money from its inception in April 2014 to the end of 2019, we estimate it to be in the range from at least $10 billion to more than $13.4 billion.
FinTelegram estimation is based on the following parameters and assumptions:
- Documented and/or communicated Numbers:
- OneCoin sales in Q3/16 were €3.353 billion (Source: US investigators);
- increased to €4 billion until Q1/17 (Source: leaked OneCoin documents);
- Fortune author David Z. Morris suggests that total revenue could be $19.4 billion
- Business for Home reports $8 billion in sales as of Jan 2018.
- Weekly sales around €60 million in June 2015
- Growth Assumptions
- OneCoin sales in the period Q4/16 to Q4/19 compared to the period Q4/14 to Q3/16 will have
- at least doubled (lower end) but more likely
- tripled (higher end)
- Growth Drivers
- crypto hype in 2017;
- the promised OneCoin IPO for 2018, and
- new members from Africa and South America.
Leaked OneCoin documents presented in Jamie Bartlett‘s BBC podcast The Missing Cryptoqueen support the hypothesis that the OneCoin growth in 2017 was driven by Africa and South America.
The first sale of a OneCoin package allegedly happened in Aug 2014 and in the 65 months since then the scheme reportedly acquired more than 3.6 million members.
The educated guess:
- By mid-March 2017 the OneCoin scheme had raised €4 billion (Source: leaked OneCoin documents);
- This is an average of €32 million sales per week;
- Let’s assume that the average was significantly lower in 2014 and significantly higher in 2016. Hence, we took an average of €40 million per week for 2015 and 2016;
- For the hype year 2017, we doubled this figure to an average of €80 million per week which may even be far too low given the big hype around crypto back then.
- For the years 2018 and 2019, we set a weekly average of €20 million.
- As a result, we estimate that there will be over €10 billion in member payments, i.e. revenue.
Again, this is only a very rough estimate and is based on the findings of the US authorities and the leaked OneCoin documents. What is certain, however, is that the loss of OneCoin members is a multiple of the loss calculated by the U.S. authorities until Q3/16.
Bigger than the Madoff Scam?
In his BBC podcast series The Missing Cryptoqueen, Jamie Bartlett refers to sources claiming the worldwide OneCoin income was as much as $15.8 billion as of early 2018. Bartlett holds it even plausible that the OneCoin scam has stolen more than the $19.4 billion lost by Bernie Madoff’s victims, making it the largest financial scam ever.
Despite many complaints and scam warnings at the end of 2016, OneCoin 2017 is still growing strongly. The prospect of an IPO and new members from Africa have fuelled growth. According to Ruja Ignatova, the OneCoin IPO should have taken place sometime from Q2/18.
The OneCoin Victims in different Continents
According to the U.S. authorities, until Q3/16 the OneCoin sources of its proceeds from members can be split across the continents as follows:
- 60% of the $3,353 billion by Q3/16 came from Asian OneCoin members,
- 18% from European OneCoin members,
- 15% from Australian OneCoin members,
- 3% from OneCoin members in North America and the Caribbean, and
- 4% of OneCoin members from around the world.
We now know that in recent years Africa and South America have also been massively attacked by the OneCoin scheme. In this respect, there is some evidence that the upper end of the estimate of the total loss between Q$/14 and YE19, at more than $13 billion, is more likely to be correct.
Ill-Gotten Gains and Money-Laundering – Where is the money?
It is no exaggeration to say that the whole world is looking for the missing billions from OneCoin and its founding ring Ruja Ignatova. So far only a fraction of the money deposited by OneCoin members has been identified. The money has been laundered and hidden through complicated corporate structures. It finally disappeared in Money Land – the shadow world of the super-rich ( © Oliver Bullough).
As of August 2018, the U.S. authorities have identified approximately $1.2 billion in OneCoin Ltd. investor funds, the affidavit of a U.S. law enforcement agent states. A substantial part of which has been laundered through financial institutions located in at least 21 different countries, including Hong Kong, Singapore, the United States, the Cayman Islands, the Republic of Ireland, and the country of Georgia.
US attorney Mark S. Scott, who was convicted on November 21, 2019, by a US jury for bank fraud and money laundering, is alleged to have laundered $400 million for OneCoin. To this end, he set up a number of funds (the “Fenero Hedge Funds“) in the British Virgin Islands, the Cayman Islands, and Ireland. Through these funds, Scott allegedly as laundered $273 million through the Bank of Ireland.