OneCoin clients file amended complaint against crypto scammers

Maria Nikolova

The plaintiffs claim they are victims of a massive fraud causing injuries in excess of $4 billion through a densely-packed multi-level-marketing system.

While criminal proceedings against Konstantin Ignatov, the leader of notorious cryptocurrency scam OneCoin, continue at the New York Southern District Court, clients of OneCoin have also brought an action against the firm and the individuals associated with it. Although the start of the civil action was somewhat clumsy due to the formalities around picking a lead plaintiff, the case appears to be progressing now, as the plaintiffs have filed their first amended complaint with the New York Southern District Court. The document, seen by FinanceFeeds, was filed with the Court on August 2, 2019.

Lead Plaintiff Donald Berdeaux and plaintiff Christine Grablis allege in the First Amended Class Action Complaint claims under the federal securities laws and common law against key operators of OneCoin Ltd. and certain of their enabling co-conspirators arising from a massive fraud perpetrated on millions of individual investors throughout the world causing injuries in excess of $4 billion through a densely-packed multi-level-marketing system.

OneCoin’s office in Sofia, Bulgaria.

Specifically, the plaintiffs allege claims for: violation of Sections 10(b), 15 U.S.C. § 78j(b), of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5(a)-(c), 17 C.F.R. § 240.10b-5(a)-(c); control person liability under Section 20(a), 15 U.S.C. § 78t(a), of the Exchange Act against the Executive Defendants; fraud; aiding and abetting; fraudulent misrepresentation; negligent misrepresentation; breach of contract; unjust enrichment; conversion; and civil conspiracy.

The plaintiffs bring this action for themselves and as a class action on behalf of all individuals and entities who transferred to the OneCoin Defendants, directly or indirectly, any fiat currency or cryptocurrency to invest in OneCoin Trader Packages or OneCoins from April 2014 through to and including March 2018 (the “Class Period”) and who suffered financial injury as a result thereof.

Lead Plaintiff Berdeaux is an individual domiciled in Great Falls, Montana. From August 2015 through May 2016, Berdeaux invested a sum total of approximately $756,000.00 in the OneCoin Investment Programs. As of the date of the filing, Lead Plaintiff Berdeaux out-of-pocket investment loss from participating in the fraudulent OneCoin Investment Programs totals approximately $755,918.92.

The list of defendants includes OneCoin Ltd, as well as Konstantin Ignatov (the leader of the entity); his sister Ruja Ignatova; Sebastian Greenwood – co-founder of OneCoin; Irina Andreeva Dilinska- the head of OneCoin’s legal and compliance department; the so-called “Scott Group” – a number of individuals allegedly involved in the laundering of OneCoin’s proceeds.

According to the plaintiffs, the OneCoin Defendants were able to sustain their massive fraud for years, in large part, because Mark Scott and his partners – David Pike and Nicole Huesmann – laundered the criminal proceeds OneCoin obtained from selling fraudulent investment programs to the plaintiffs and the proposed class.

According to the Complaint, OneCoin was founded in or about April 2014 by Defendants Ruja Ignatova and Greenwood.

In the summer of 2014, Ruja Ignatova and Sebastian Greenwood exchanged numerous emails discussing and planning their development of “trashy coin”. In these emails Ruja explained the planned compensation structure for “trashy coin” as follows:

“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, 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 b*tch of wall street ; – )

Ruja Ignatova asked a developer to create a website that looked like a real exchange and blockchain for OneCoin but was not actually a legitimate exchange or blockchain. As she later explained in an email to Greenwood, a fake exchange and blockchain would enable the OneCoin Defendants to “manipulate the exchange by simulating some volatility and intraday pricing.”

OneCoin had no blockchain. Instead, OneCoin simply used a basic computer SQL script to “generate coins”.

As Greenwood himself confessed in an e-mail he sent to Ruja Ignatova:

[GREENWOOD]: How can this be investigated and found out?

Can any member (trying to be clever) find out that we actually are not investing in machines to mine but it is merely a piece of software doing this for us?

Within months of OneCoin’s founding, the founders of the firm were already discussing their plans for an “exit strategy” once the OneCoin Investment Programs inevitably collapsed. For instance, on or about August 9, 2014, Ruja Ignatova described one strategy as: “Take the money and run and blame someone else for this”.

Ruja Ignatova is currently a fugitive. Konstantin Ignatov has been arrested and is a defendant (along with Mark Scott) in a criminal case at the New York Southern District Court.

The plaintiffs in the civil case request (inter alia) preliminarily enjoining the defendants from making further transfers or dissipations of the investments raised from the offer and sale of OneCoins and in connection with the OneCoin trader packages/memberships, or using such funds in any further purchases or transactions. The plaintiffs also request an accounting of the remaining funds and assets raised from the plaintiffs and the Class in connection with the offer and sale of OneCoins and the OneCoin trader packages/memberships. The plaintiffs also seek rescission of the investments made by them and the Class relating to the offer and sale of OneCoins and the OneCoin trader packages/memberships and/or compensatory damages.

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