A Florida resident confessed to participating in a conspiracy to defraud a bank as part of the $4 billion OneCoin Ponzi scheme.
In a telephone hearing held in Manhattan federal court, David Pike, 61, pled guilty to conspiracy to commit bank fraud. Prosecutors asserted that Pike helped former Locke Lord LLP attorney Mark Scott launder $400 million as part of the scheme. Pike could face up to five years in prison upon being sentenced in January.
Scott himself was convicted of money-laundering conspiracy and bank-fraud conspiracy in 2019. According to prosecutors, he had set up a fake investment fund to process money from the person behind OneCoin, Ruja Ignatova. The Bulgarian woman known as the ‘Cryptoqueen’ has been missing since OneCoin came under suspicion in 2017. Meanwhile, Ignatova’s brother, Konstantin Ignatov, pled guilty to fraud and money laundering. He also testified against Scott in his trial. While convicted, both men are still awaiting sentencing.
OneCoin Ponzi scheme
While some critics of cryptocurrencies claim that Bitcoin itself is a Ponzi scheme, the OneCoin project is one instance that actually proved to be one. OneCoin claimed to be a cryptocurrency with a private blockchain and a platform for learning about crypto. The firms OneLife, OneAcademy and OneWorldFoundation were also part of the scheme.
Its main business was selling “education packages” ranging from $110 to $55,555, offered through OneLife and OneAcademy. OneWorldFoundation was purportedly a children’s charity that accepts donations through OneCoins, PayPal, bank transfer, and credit and debit cards. Each package included “tokens,” which could be assigned to “mine” OneCoins.
However, it turned out that OneCoins had no value and could not be used to purchase anything. In reality, OneCoin has been operating as a global multilevel marketing network, in which it paid commissions to members for recruiting other people to buy OneCoin packages. Between 2014 and 2016, OneCoin generated €3.4 billion ($4 billion) in revenue. Based in Sofia, Bulgaria, OneCoin claimed to have more than 3 million members worldwide at its peak.
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