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
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
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.
-
What is the average salary by age – and how do you compare?Are you making more than your peers? We look at the average salary by age to see how much the typical Brit earns at different stages of their life
-
Tesco braces for supermarket price war with rival AsdaTesco, Britain’s biggest grocer, has opted to cut its prices more quickly to prevent Asda grabbing market share
-
Supersonic travel: How China could 'leapfrog' US and Europe's commercial aviation industryOpinion Innovation in commercial aviation has been stuck for 60 years. A commercial supersonic jet might be back on the market soon, but will China get there first?
-
How British businesses can tackle Trump's tariffsThe majority of British businesses are likely to take a hit from the chaos caused by Trump’s tariffs to reorder global trade. Companies in the firing line face some difficult decisions, says David Prosser
-
Ben Cohen: The Ben & Jerry’s co-founder who wants to break away from UnileverBen Cohen of Ben & Jerry’s ice cream is seeking to break away from Unilever, the conglomerate he sold out to in 2000. It’s a battle for the soul of the brand synonymous with corporate do-gooding.
-
Trump wants to colonise Mars – will it happen?Donald Trump wants to plant the US flag on Mars. Could humans really live there?
-
Anne Wojcicki: the 'daring' 23andMe CEO who reached too farProfile Anne Wojcicki dreamed of a revolution in personal genomics and medicine and set up 23andMe in 2006. Its collapse into bankruptcy provides a cautionary tale
-
Why are energy bills so expensive in the UK?Electricity bills in the UK are higher than in any comparable rich country. Some blame the net-zero zealotry of the government for that. What is really to blame for high energy bills?
-
Will Putin invade Europe? Why investors know Russia is a paper tigerOpinion Markets are right to ignore talk of Putin invading Europe, says Max King.
-
Why French far-right leader Marine Le Pen has been banned from running for officeMarine Le Pen, presidential candidate and leader of France's right-wing National Rally party, has been barred from standing by the country's judges.
