Dr Ruja Ignatova, the self-styled ‘cryptoqueen’, who allegedly led one of the world’s biggest cryptocurrency scams, is now on the Federal Bureau of Investigation’s 10 Most Wanted Fugitives list, the probe agency announced on Thursday (June 30).
Investigators have accused the 42-year-old woman, who was born in Bulgaria, of defrauding victims of more than $4 billion (€3.83 billion) through the OneCoin cryptocurrency company that she founded in 2014
The FBI is offering a $100,000 reward for any information leading to the arrest of Ignatova, who has been missing since 2017, when US officials first issued a warrant for her arrest.
She is only the 11th woman to be included in the FBI’s Ten Most Wanted Fugitive List in its 72 year history, as reported by Forbes.
‘Old scam with a virtual twist’
Before leading one of the most notorious cryptocurrency scams, Ruja Ignatova had an illustrious resume, with a law degree from Oxford and a stint with McKinsey.
In 2014, she established OneCoin Ltd, and the ‘cryptoqueen’ began to market her currency as a “bitcoin killer.” According to investigators, Ignatova made false representations to receive huge amounts of funds from investors, many of whom did not fully understand how to invest in cryptocurrency. The company operated around the world, and had more than 3 million investors from over a hundred countries. Records that were obtained during the investigation reveal that between the fourth quarter of 2014 and third quarter of 2016 alone, OneCoin generated a whopping €3.353 billion in sales revenue and earned “profits” of €2.232 billion.
“She timed her scheme perfectly, capitalizing on the frenzied speculation of the early days of cryptocurrency,” said Damian Williams, the top federal prosecutor from Manhattan.
Ignatova promised investors big returns at minimal risk and, according to prosecutors, offered buyers a commission, if they sold OneCoin to more people, so as to lure even more people into buying her fraudulent currency.
IRS Special Agent in Charge, John R. Tafur called it “an old scam with a virtual twist” — which was made for the sole purpose of defrauding investors.
The “exit strategy” for OneCoin was to “take the money and run and blame someone else,” Ignatova said to her co-founder in an email unearthed during the investigation.
Investigators allege that it was essentially a Ponzi scheme from the very start, which was falsely portrayed as a cryptocurrency. Ponzi schemes are a kind of fraud where one party promises high returns on investment with little to no risk. Early investors are repaid by acquiring new ones. Once there are not enough people to secure new rounds of investment, the scheme collapses and investors lose their money.
How the scam worked
The misrepresentations Ignatova and other OneCoin representatives are said to have conned victims of the fraud through a series of false and misleading statements.
They had promised that OneCoin cryptocurrency was ‘mined’ through mining servers and its value was based on market supply and demand, with the value supposedly growing from €0.50 to around €29.95 per coin, as of January 2019. In reality, OneCoin was not mined at all, and its value was completely determined internally by Ignatova and her co-conspirators.
OneCoin also claimed to have a blockchain (a digital ledger that identifies the currency and records its historical transactions) that is used by other crypto currencies. Since it was not secured by any such technology, the OneCoin tokens were basically worthless, as they could not be actively traded, could not be used to buy anything and investors had no way of tracing their money.
“OneCoin claimed to have a private blockchain,” said FBI Special Agent Ronald Shimko in a statement reported by AFP.
“This is in contrast to other virtual currencies, which have a decentralized and public blockchain. In this case, investors were just asked to trust OneCoin,” he said.
Ignatov also repeatedly told OneCoin members that an “initial public offering” of the company would take place on various dates between 2018 and 2019, to create excitement and receive even more investment from the victims. However, the FBI reports that this offering was consistently postponed and it never took place.
The ‘cryptoqueen’ disappeared into thin air in 2017, when investigating bodies from across the world began to search for her.
Ignatova had bugged her boyfriend’s apartment after growing suspicious of him. When she found out that he was cooperating with an FBI probe into OneCoin, she immediately boarded a flight from Bulgaria to Greece and has not been seen since.
She speaks English, German and Bulgarian and might be using a fake passport. She has brown eyes and dark hair, however investigators claim that she might have changed her appearance, according to the New York Post.
Ignatova has since been charged with conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering, securities fraud and conspiracy to commit securities fraud, by the US government.
According to The Washington Post, the first four counts each carry a sentence of up to 20 years in prison, while the last is punishable by up to 5 years in prison.
After 2017, her brother Konstantin Ignatov took over the company. However, he was arrested in Los Angeles by the FBI in 2019 for wire fraud. After pleading guilty to a series of felonies, he entered into a plea deal to cooperate with US authorities, according to The Washington Post.
Along with him, US corporate lawyer Mark Scott was also convicted in 2019 for laundering $400 million for OneCoin.
Read More:Explained: Who is ‘cryptoqueen’ Ruja Ignatova, now among FBI’s ten most wanted?