In an international case, the US must establish clear jurisdiction before it acts. Photo: iStock

Much has been written about Dubai-based OneCoin Ltd and Belize-based OneLife Ltd (aka OneLife Network), that many have alleged is the biggest ever crypto-based Ponzi scheme. But many questions still remain.

Where is the OneCoin money now? Where is Ruja Ignatova, the Bulgarian-born German citizen, who allegedly started OneCoin in 2014 and still remains at large? And why has the US Department of Justice, the Federal Bureau of Investigation and the Department of the Treasury’s Financial Crimes Enforcement Network not issued a single press release – let alone a warning to the public – which mentions OneCoin and have yet to make any convictions?

Back in September 2018, a special assistant US attorney told a judge in the US Southern District of New York that OneCoin was an international “hybrid Ponzi pyramid scheme” that defrauded victims of approximately $4 billion.

“It is a fraudulent cryptocurrency that does not have, as far as the investigation has determined, a true blockchain, and most investors have not been able to recoup or take their money out of the scheme once they invest in these coins,” the attorney Julieta Lozano said. “There is some degree of Ponzi scheme here simply because there are commissions paid to promoters and recruiters in order to bring in more victims.”

This was at the trial of US lawyer Mark S Scott, a former partner with the international law firm Locke Lord, who stood accused of laundering approximately $400m via a network of hedge funds, Cayman Island bank accounts and businesses in Ireland. Lozano claimed in court that these funds were from OneCoin.

Earlier this month, on February 8, Scott was served a grand jury subpoena that requested “a wide variety of documents” related to OneCoin. Scott is currently trying to use a Fifth Amendment privilege – “the constitutional right of a person to refuse to answer questions or otherwise give testimony against himself” – to contest the indictment, which relates to transactions of OneCoin investor funds between entities based in the US and internationally.

Extradited from Thailand

Last November, the Bangkok Post reported that Thailand’s Crime Suppression Division responded to an Interpol red notice – in support of the FBI – and apprehended a Swedish citizen, Sebastian Greenwood, who has been described as the “public face of OneCoin”. He was charged with operating a “digital currency pyramid scheme” and has been since extradited to the US.

Meanwhile, Europol, Interpol and Germany’s financial supervisory agency BaFin are actively supporting ongoing investigations into OneCoin.

BaFin was one of the first agencies to react to OneCoin’s activities by issuing a cease and desist order in April 2017. A spokesperson for the body told Asia Times that it does not “comment on ongoing investigations of any kind” but did add that “if BaFin determines that an undertaking is actually conducting unauthorized business, as a supervisory authority it has extensive powers to immediately put an end to such business”.

Europol spokesperson Claire Georges would only tell Asia Times that  “I can confirm Europol is involved in the ongoing investigation, but I cannot provide you with any further details. Europol’s role is a supporting one.”

Interpol, warnings in many countries

Interpol, based in Lyon, France convened the first two meetings of its new Darknet and Cryptocurrency Working Group last year but the body said that these meetings, and its investigations, were not ready to be revealed.

In New Zealand, the government’s  Financial Markets Authority issued a warning in mid-December and simply stated that: “We recommend extreme caution before investing with OneLife or OneCoin as we are concerned they bear the characteristics of a scam, including withholding client funds and promising unrealistic returns.”

More than a dozen other countries have also issued warnings since 2017. There have also been dozens of news reports over the last year or so, especially from India and China, about cases brought against local-level operators of OneCoin. But nobody who was actually behind the alleged scheme has been tried yet.

The US Department of Justice has apparently been investigating OneCoin since at least 2017 but seems to have not issued an indictment until the Scott and Greenwood cases last year.

The delay could be because of jurisdiction, says Julie Myers Wood,  former head of Immigration and Customs Enforcement for the US Department of Homeland Security. The US must establish clear jurisdiction before it acts and other countries will be happy to wait for this to happen.

“Once someone is charged with a crime in [an American] federal court, the US has an extremely strong record of convictions and correspondingly, strong penalties for those convicted,” says Wood. “US authorities may have been engaged much earlier than was publicly apparent. The typical life of a criminal investigation is several years for federal white-collar and financial cases. The enforcement framework and requirements to bring a criminal prosecution are different for each enforcement agency.”

Wood added: “It is important to note that the US has different standards of proof from those countries that previously charged OneCoin principals.”

Cryptocurrencies are complicated things. And clearly so are the cross-border money-making webs that have emerged off the back of them over the last few years.

Join the Conversation


Leave a comment

Your email address will not be published.