MANHATTAN (CN) – Nearly three years before his arrest this week in Los Angeles International Airport, a top leader of the cryptocurrency company OneCoin chatted with a co-founder about their customers.
Federal prosecutors recounted the Sept. 21, 2016, conversation in a criminal complaint unsealed Friday, charging Konstantin Ignatov, 33, of Sofia, Bulgaria, with a multibillion-dollar pyramid scheme.
According to the transcript, the unnamed co-founder sneered: “These ppl are idiots.”
“as you told me, the network would not work with intelligent people,” Ignatov is quoted as replying, adding a winking emoticon to his message.
Following his arrest Wednesday, Ignatov faces up to 20 years imprisonment if convicted of conspiring to commit wire fraud.
Still at large is OneCoin founder Ruja Ignatova, the 38-year-old older sister of the defendant who is charged in a separate indictment.
Federal prosecutors in New York claim that Ignatova funneled more than $400 million through a thicket of Cayman Island and Irish shell companies with help from 50-year-old lawyer Mark Scott. A former partner at the major law firm Locke Lord, Scott was arrested on Sept. 5, 2018. He faces up 20 years imprisonment if convicted of conspiring to commit money laundering.
Manhattan U.S. Attorney Geoffrey Berman characterized the charges against them as a traditional tale of “lies and deceit” for a digital age.
“They promised big returns and minimal risk, but, as alleged, this business was a pyramid scheme based on smoke and mirrors more than zeroes and ones,” Berman said. “Investors were victimized while the defendants got rich.”
Founded five years ago and still operational, OneCoin lures members by promising commissions for recruiting others who purchase cryptocurrency packages.
“This multi-level marketing structure appears to have influenced rapid growth of the Onecoin member network,” Ignatov’s indictment states.
Prosecutors estimate that OneCoin generated more than $3.7 billion in sales revenue between the fourth quarter of 2014 and the third quarter of 2016 alone, raking in roughly $2.5 billion in “profits.”
The indictment recounts Ignatov’s jet-setting around the world for OneCoin-OneLife events, including in Thailand, Singapore, Colombia, Argentina, Brazil, Paraguay, Bulgaria, France and Spain.
Like her brother, Ruja Ignatova is depicted in the indictment as disparaging of her clientele.
Shortly before OneCoin’s founding, Ruja Ignatova allegedly wrote an email to her unnamed co-founder referring to their business as “trashy coin.”
“It might not be [something] really clean or that I normally work on or even can be proud of (except with you in private when we make the money) — but … I am especially good in this very borderline cases [sic], where the things become gray — and you as the magic sales machine – and me as someone who really can work with numbers, legal and back you up in a good and professional way — we could really make it big – like MLM meets bitch of wall street,” Ignatova wrote, according to the indictment. Like her brother, she appended a winking emoticon to the message.
Prosecutors do not identify the recipient of that email or the cooperating witness who pleaded guilty to federal charges.
Though Ignatova founded the company, prosecutors say, her brother rose in the ranks to join its top leadership in 2018.
OneLife did not respond to an email sent to their media relations account by press time.