OneCoin's co-founder pleads guilty to running crypto Ponzi scheme

OneCoin’s co-founder and the Cryptoqueen’s associate has pleaded guilty to running a Ponzi scheme. Millions were duped into purchasing a deceptive virtual currency that caused billions of dollars in shortfalls.

U.S. Attorney Damian Williams confirmed that Karl Sebastian Greenwood entered a plea of guilty to circuit money laundering and fraud charges in Manhattan federal court on Dec. 16.

“This guilty plea by the co-founder of OneCoin caps a week at SDNY that sends a clear message that we are coming after all those who seek to exploit the cryptocurrency ecosystem through fraud.”

Damian Williams, the top federal prosecutor in Manhattan

How OneCoin functioned

OneCoin, premised in Bulgaria, was launched in 2014. Sebastian co-founded OneCoin with Ruja Ignatova, a.k.a. the Cryptoqueen. The organization operated an MLM network whereby members acquired commissions for recruiting individuals to purchase their packages.

The OneCoin participant network expanded quickly. Over 3 million individuals bought phony digital asset packs. As per OneCoin documentation, the organization made €4.037 billion in sales revenue and €2.735 billion in profits between 2014 and 2016.

Ignatova was OneCoin’s top executive until she vanished in October 2017. Greenwood was OneCoin’s global master distributor and the head of the MLM network, where the fraudulent cryptocurrency was promoted. In a video published online, the concept of promoting and selling OneCoin through a MLM network structure was attributed to Greenwood by Ignatova. Greenwood purportedly made about €20 million per month at this position.

In an email exchange with Greenwood on August 9, 2014, Ignatova discussed her ideas regarding the “exit strategy” for OneCoin:

“Take the money and run and blame someone else for this.”

Ruja Ignatova, OneCoin founder

Additionally, in a conversation with Konstantin Ignatova on September 11, 2016, Greenwood referred to OneCoin investors as idiots, to which Ignatova replied, “as you told me, the network would not work with intelligent people.”