It is no surprise that crypto-fraud dominates the IRS:CI top ten list for 2023. Digital coin, money laundering, and tax fraud are common bedfellows. To prove the durability of crypto in tax crime, the #3 cryptocurrency case is not even about real coin—the exchange was fake from the get-go, and the fraudsters still scammed investors out of billions.
46-year-old Karl Sebastian Greenwood from Sweden, and 44-year-old “CryptoQueen,” Ruja Ignatova from Bulgaria, co-founded a digital scam in 2014 called OneCoin, which they based in Bulgaria. OneCoin was a multi-level-marketing scheme (MLM) based on the fake cryptocurrency OneCoin. OneCoin was hyped at the top by Mr. Greenwood and Ms. Ignatova, and sold through a network of members, each of whom received commissions for recruiting other members and selling cryptocurrency packages.
While the value of the coin was always zero, OneCoin attracted victims who invested more than $4 billion. The party was hot from 2014 until 2017, with the co-conspirators earning millions until 2016. Text messages from 2016 obtained by law enforcement revealed growing concerning about the scam between Mr. Greenwood and Ms. Ignatova. Ms. Ignatova wrote, “Take the money and run and blame someone else for this . . . .” Mr. Greenwood wrote, “These ppl are idiots,” to which Mr. Ignatova replied “as you told me, the network would not work with intelligent people ;).”
Under the auspices of managing an exchange, the pair manipulated OneCoin to exhibit trading volatility and pricing, which they were setting personally. OneCoin claimed the company owned servers for mining coin and used a private digital ledger—neither of which existed. The lies got more glorious, the value claims got larger, and OneCoin opened for business in the U.S. on July 4, 2015.
On October 12, 2017, Ms. Ignatova was charged with fraud and money laundering, backed by a federal arrest warrant. A week later she traveled from Bulgaria to Athens and disappeared. Ms. Ignatova was added to the Federal Bureau of Investigation (FBI) Top Ten Most Wanted List with a reward of $250K for information leading to her arrest.
Mr. Greenwood was arrested at his home in Thailand in July 2018 and extradited to the U.S. on similar charges. Pleading guilty to one count of conspiracy to commit wire fraud, Mr. Greenwood was sentenced to 20 years in prison. He will pay a $300 million penalty. U.S. Attorney Damian Williams underscored the intent of the prosecution, “…OneCoins were entirely worthless, and investors were left with nothing, while Greenwood lined his own pockets with over $300 million. We hope this lengthy sentence resonates in the financial sector and deters anyone who may be tempted to lie to investors and exploit the cryptocurrency ecosystem through fraud."
So where in the world is Ruja Ignatova? A tipster could earn cold hard cash for that information.
Facing allegations of tax fraud or questions about offshore banking? Speak with our team of experienced criminal defense attorneys
Working with local, national, and international clients facing allegations, or compliance problems, the tax lawyers at Robert J. Fedor, Esq., LLC provide aggressive, skilled legal defense. With offices in Cleveland and Chicago, contact us or call 440-250-9709.
