Great frauds in history: crypto-queen Ruja Ignatova and her “bitcoin killer”

Ruja Ignatova convinced punters to put up to $12bn into her worthless "OneCoin" cryptocurrency – then disappeared with the loot.

Ruja Ignatova © Paul Hampartsoumian/Shutterstock
(Image credit: © Paul Hampartsoumian/Shutterstock)

Ruja Ignatova was born in Sofia, Bulgaria in 1980, before moving to Germany with her family when she was ten. In 2005 she was awarded a doctorate in law from the University of Konstanz. She went on to work for management consultancy McKinsey & Co in their eastern European office. In 2014 Ignatova set up OneCoin, which she claimed was a cryptocurrency that would become a “bitcoin killer”, and began promoting the currency at large public conferences around the world, including one at Wembley Stadium.

What was the scam?

Ignatova invited investors to buy “packages” that would give the owner tokens that could be used to “mine” OneCoin. The price of OneCoin was displayed on a website. Although this website showed the currency soaring in value from £0.43 in January 2015 to over £25 in 2019, this wasn’t based on any real transactions, but solely determined by the people running OneCoin. Ownership of the currency was stored on an ordinary database, rather than the blockchain (digital ledger) underpinning other digital currencies. Those who wanted to withdraw their money were paid out of money flowing in – in other words, it was in effect a Ponzi scheme.

What happened next?

Almost immediately after it began, OneCoin generated controversy with regulators around the world, who warned it could be a scam. Despite this, Ignatova’s charisma continued to lure in large amounts of money. Some likened the organisation to a cult. It was not until she mysteriously disappeared in 2017, just before she was due to give a talk, that the scheme started to unravel. Ignatova is still wanted by the US Department of Justice. Her brother Konstantin was convicted of fraud and money laundering last year, along with a number of other people connected to the scheme.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Lessons for investors

Overall, the US authorities estimate that, between 2014 and 2017, OneCoin took in at least $4bn of investors’ money; some believe the final amount could be as much as $12bn.Investors are unlikely to get much of it back. One big red flag was the use of multi-level marketing techniques, where investors were encouraged to recruit friends and family into the scheme by giving them a small commission based on the additional money that was invested. Many of these commission payments were reinvested in OneCoin.

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri