Author: Kumari Nikita, School of Legal Studies, REVA University, Bangalore
To the Point
The OneCoin cryptocurrency scheme represents one of history’s most sophisticated financial frauds, orchestrated by Ruja Ignatova and Sebastian Greenwood from 2014 to 2017, defrauding approximately $4 billion from over 3.5 million victims worldwide. Unlike legitimate cryptocurrencies, OneCoin lacked fundamental blockchain infrastructure, operating through a centralized database that made it a fraudulent security offering under federal securities laws. The legal fallout has been extensive, with multiple federal prosecutions establishing significant precedents for cryptocurrency regulation, international law enforcement cooperation, and complex civil litigation that continues to shape the legal landscape for digital assets.
The Securities Law Framework: Application of the Howey Test
The OneCoin scheme constituted a textbook violation of federal securities laws, specifically the Securities Act of 1933 and the Securities Exchange Act of 1934, by satisfying all four prongs of the Howey test for investment contracts. The landmark case which is namely stated under Securities and Exchange Commission v. W.J. Howey Co., 328 U.S. 293 (1946), an investment contract exists when there is:
(1) an investment of money,
(2) in a common enterprise,
(3) with a reasonable expectation of profits,
(4) derived from the efforts of others.
OneCoin’s marketing materials explicitly promised returns based on the purported appreciation of the cryptocurrency from €0.50 to €29.95, with profits dependent on the efforts of the OneCoin organization rather than investor control. The U.S. Attorney’s securities fraud charges against Ignatova specifically cited violations of SEC Rule 10b-5, alleging she “did use and employ manipulative and deceptive devices and contrivances” in connection with the sale of securities.
The scheme’s securities fraud violations were compounded by its failure to register with the Securities and Exchange Commission, constituting violations of 15 U.S.C. § 77e. This application of the Howey test to cryptocurrency offerings has established critical precedent for the regulation of digital assets in subsequent cases.
Use of Legal Jargon
Wire Fraud Jurisprudence: 18 U.S.C. § 1343
Federal prosecutors successfully applied wire fraud statutes under 18 U.S.C. § 1343 to the OneCoin scheme, which criminalizes schemes to defraud using interstate wire communications. The prosecution established all four essential elements required for wire fraud convictions:
The people in question intentionally took an active role in a fraudulent plan.
The statements made were material and influenced victims to part with money
The defendants acted with specific intent to defraud
Interstate wire communications were used to carry out the scheme
The international scope of OneCoin, involving wire transfers from victims worldwide to OneCoin accounts, clearly established the requisite interstate commerce nexus required by the statute. This application of wire fraud statutes to cryptocurrency schemes has created important precedent for prosecuting similar digital asset frauds.
Money Laundering Precedents: 18 U.S.C. § 1957
Under 18 U.S.C. § 1957, the government successfully prosecuted multiple defendants for engaging in monetary transactions exceeding $10,000 involving criminally derived property.
The conviction of attorney Mark Scott for laundering approximately $400 million through shell companies in the British Virgin Islands exemplifies the sophisticated money laundering apparatus employed by the conspirators and establishes important precedent regarding attorney liability in cryptocurrency fraud schemes. Scott’s conviction demonstrated that legal professionals cannot claim ignorance when facilitating obvious fraudulent activities in the cryptocurrency space.
The Second Circuit Court of Appeals upheld Scott’s conviction in January 2025, rejecting his arguments that the government failed to produce sufficient evidence to prove conspiracy to commit money laundering and that his sentence impermissibly reflected extraterritorial conduct. This appellate decision strengthens the precedential value of the OneCoin money laundering convictions for future cryptocurrency fraud prosecutions.
The Proof
Principal Defendants and Sentences
Sebastian Karl Greenwood, OneCoin’s co-founder, received a 20-year federal prison sentence following his guilty plea to wire fraud and money laundering charges. U.S. District Judge Edgardo Ramos imposed this sentence, emphasizing the scheme’s unprecedented scale and impact on victims worldwide.
Mark Scott, the scheme’s legal counsel, was sentenced to 10 years in prison for laundering approximately $400 million in OneCoin proceeds. Scott’s conviction established important precedent regarding attorney liability in cryptocurrency fraud schemes, demonstrating that legal professionals cannot claim ignorance when facilitating obvious fraudulent activities.
Konstantin Ignatov, Ruja Ignatova’s brother, pleaded guilty to money laundering and wire fraud charges, facing a maximum sentence of 90 years in prison. His cooperation with federal authorities provided crucial evidence regarding the scheme’s operations and his sister’s disappearance.
Irina Dilkinska, who worked as OneCoin’s “Head of Legal and Compliance,” got four years in jail for her part in the fraud. Her conviction underscores the expansive liability framework applied to cryptocurrency fraud conspirators.
Ruja Ignatova, The Missing Cryptoqueen: Listed on the FBI’s Ten Most Wanted Fugitives list in June 2022, Ruja Ignatova was continues to be considered a vital suspect associated with the OneCoin case.
Federal authorities have issued a superseding indictment charging her with conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering, conspiracy to commit securities fraud, and securities fraud. The FBI has increased the reward for information leading to her arrest to $250,00.
Ignatova disappeared on October 25, 2017, traveling from Sofia, Bulgaria, to Athens, Greece, shortly after a federal warrant was issued for her arrest. Recent reporting suggests she may have been murdered in 2018 on orders of Bulgarian organized crime figures, though her fate remains unconfirmed.
International Legal Cooperation and Asset Recovery
Multi-Jurisdictional Enforcement
The OneCoin investigation exemplifies modern international law enforcement cooperation in cryptocurrency cases. Bulgarian authorities, working with German prosecutors and Europol, conducted coordinated searches of OneCoin offices and affiliated companies in Sofia. Chinese law enforcement recovered 1.7 billion yuan (approximately $267.5 million) while prosecuting 98 individuals connected to the scheme.
Asset Forfeiture and Freezing Orders
Federal prosecutors have pursued extensive asset forfeiture proceedings, seeking $393 million from Mark Scott’s accounts and properties. The Department of Justice obtained preliminary forfeiture orders targeting bank accounts and assets traceable to the money laundering conspiracy.
In August 2024, the London High Court issued worldwide freezing orders against Ignatova and her associates, representing a significant development in victim recovery efforts. Over 400 OneCoin investors, represented by Mishcon de Reya LLP, obtained these orders targeting luxury properties and assets linked to the fraud.
Abstract
The OneCoin cryptocurrency scheme, orchestrated by Bulgarian national Ruja Ignatova and co-founder Sebastian Karl Greenwood, represents one of the most sophisticated and devastating financial frauds in modern history. Operating from 2014 to 2017, this elaborate Ponzi and pyramid scheme defrauded investors of approximately $4 billion worldwide, affecting over 3.5 million victims across multiple jurisdictions. Unlike legitimate cryptocurrencies, OneCoin lacked fundamental blockchain infrastructure and operated through a centralized database, making it a fraudulent security offering under federal law. The legal ramifications have been extensive, resulting in multiple federal prosecutions, international law enforcement cooperation, and complex civil litigation proceedings that continue to shape cryptocurrency regulation and enforcement paradigms.
The Legal Architecture of the OneCoin Fraud Scheme
Modus Operandi and Federal Securities Violations
OneCoin’s operational structure constituted a textbook violation of federal securities laws, specifically the Securities Act of 1933 and the Securities Exchange Act of 1934. The scheme satisfied all four prongs of the Howey test for investment contracts:
investment of money,
common enterprise,
expectation of profits, and
profits derived from efforts of others.
Defendants marketed OneCoin packages through a multi-level marketing network, promising returns based on the purported appreciation of the cryptocurrency from €0.50 to €29.95.
The scheme’s securities fraud violations were compounded by its failure to register with the Securities and Exchange Commission, constituting violations of 15 U.S.C. § 77e. Federal prosecutors established that OneCoin operated as unregistered securities, with defendants willfully selling these instruments to the public through interstate commerce without proper registration or exemption.
Wire Fraud and Money Laundering Violations
Federal wire fraud charges under 18 U.S.C. § 1343were a major component of the OneCoin case, which criminalizes schemes to defraud using interstate wire communications. The scheme’s international scope, involving wire transfers from victims worldwide to OneCoin accounts, clearly established the requisite interstate commerce nexus.
Money laundering charges under 18 U.S.C. § 1957 were substantiated through defendants’ engagement in monetary transactions exceeding $10,000 involving criminally derived property. Attorney Mark Scott’s conviction for laundering $400 million through shell companies in the British Virgin Islands exemplifies the sophisticated money laundering apparatus employed by the conspirators.
Case Laws
Sebastian Karl Greenwood
OneCoin’s co-founder received a 20-year federal prison sentence in September 2023 following his guilty plea to wire fraud and money laundering charges. U.S. District Judge Edgardo Ramos imposed this sentence, emphasizing the scheme’s unprecedented scale and impact on victims worldwide. Greenwood’s appeal of his sentence was rejected by the Second Circuit in January 2025, which upheld the district court’s calculation of his sentence based on both domestic and foreign losses from the scheme.
Mark Scott
In January 2024, the scheme’s lawyer received a 10-year prison term for laundering almost $400 million in OneCoin profits. His conviction established important precedent regarding attorney liability in cryptocurrency fraud schemes, demonstrating that legal professionals cannot claim ignorance when facilitating obvious fraudulent activities. The Second Circuit rejected Scott’s appeal in January 2025, affirming both his conviction and sentence.
Irina Dilkinska
OneCoin’s “Head of Legal and Compliance” received a four-year prison sentence in April 2024 for her role in the fraud. Along with her jail sentence, she also had to pay $111 million in restitution and complete a period of supervised liberty. Judge Ramos rejected Dilkinska’s plea to avoid incarceration based on family responsibilities in Bulgaria, emphasizing her culpability in the scheme.
Ruja Ignatova: The Missing Cryptoqueen
Ruja Ignatova remains the central fugitive in the OneCoin case, having been added to the FBI’s Ten Most Wanted Fugitives list in June 2022 with a reward for information leading to her arrest increased to $5 million. Federal authorities have issued a superseding indictment charging her with conspiracy to commit wire fraud, wire fraud, conspiracy to commit money laundering, conspiracy to commit securities fraud, and securities fraud.
Ignatova disappeared on October 25, 2017, traveling from Sofia, Bulgaria, to Athens, Greece, shortly after a federal warrant was issued for her arrest. Recent reporting suggests she may have been murdered in 2018 on orders of Bulgarian organized crime figures, though her fate remains unconfirmed.
Berdeaux v. OneCoin Ltd.
The primary U.S. class action lawsuit, Berdeaux v. OneCoin Ltd., was filed in the U.S. District Court for the Southern District of New York in May 2019. Lead plaintiffs Donald Berdeaux and Christine Grablis sought damages for securities fraud, common law fraud, and RICO violations after investing $756,000 and $130,000 respectively.
However, the class action faced insurmountable practical challenges due to defendants’ judgment-proof status. OneCoin Ltd. was defunct with no attachable assets, Ignatova remained at large, and other defendants were in federal custody facing lengthy prison sentences.
Conclusion
The OneCoin prosecutions have established critical legal precedents for cryptocurrency regulation and enforcement. The application of the Howey test confirmed that fraudulent cryptocurrency schemes satisfy the criteria for investment contracts, subjecting them to full Securities Act registration and disclosure requirements. The successful prosecution of wire fraud and money laundering charges demonstrated the adaptability of traditional financial crime statutes to digital asset schemes.
The international legal cooperation between U.S., German, Bulgarian, and other authorities provides a template for future cryptocurrency enforcement actions. However, victim recovery remains challenging despite recent developments like the UK freezing orders. As a warning to investors and a model for prosecutors addressing complex virtual currency scams, the OneCoin story promises to have an impact on cryptocurrencies laws and regulations throughout the world.
FAQs
What made OneCoin different from legitimate cryptocurrencies?
A: OneCoin lacked fundamental blockchain infrastructure and instead operated through a centralized SQL database. The cryptocurrency was never actively traded, had no mining process, and its value was arbitrarily determined by the company rather than market forces.
How much money did investors lose in the OneCoin scheme?
A: Federal prosecutors allege that OneCoin defrauded investors of approximately $4 billion worldwide, affecting over 3.5 million victims.
What happened to the main perpetrators?
A: Sebastian Greenwood received 20 years in prison, Mark Scott received 10 years, and Irina Dilkinska received 4 years. Ruja Ignatova remains on the FBI’s Ten Most Wanted list with a $250,000 reward.
Can victims recover their losses?
A: Recovery prospects remain limited due to the defendants’ judgment-proof status. However, the 2024 UK freezing orders represent the most promising development for asset recovery.
How did OneCoin violate securities laws?
A: OneCoin satisfied the Howey test for investment contracts but failed to register with the SEC, violating 15 U.S.C. § 77e. The scheme also involved securities fraud through material misrepresentations about the cryptocurrency’s nature and value.
