FBI's hunt for fallen 'Cryptoqueen' Ruja Ignatova revives bad memories in China

Ruja Ignatova is seen on an “FBI Ten Most Wanted Fugitive” poster, issued on Friday.
PHOTO: Twitter/CasPiancey

Ruja Ignatova, the missing self-described “Cryptoqueen” who has been added to the US Federal Bureau of Investigation’s Ten Most Wanted Fugitives list, is also known for allegedly engineering a Ponzi scheme in China, making the elusive figure a rare target for law enforcement authorities in both Beijing and Washington.

Bulgarian-born Ignatova, who created a cryptocurrency scheme called OneCoin that raked in almost US$4 billion (S$5.6 billion) after launch in 2014, was added to the most wanted list by the FBI last week for “alleged leadership of a massive fraud scheme that affected millions of investors worldwide”, according to the bureau’s website. It has offered a reward of up to US$100,000 for relevant information regarding Ignatova.

The 42-year-old fugitive vanished from public view in 2017, when US officials first signed an arrest warrant for her. Ignatova had touted OneCoin as a “Bitcoin killer”.

In China, Ignatova is accused of masterminding a fraudulent investment scheme – also based around OneCoin – that involved around 15 billion yuan (US$2.24 billion), which led to as many as 98 people being charged.

Back in 2017, at least 35 people in China joined the OneCoin scheme through online platforms or referrals and made illegal profits by cultivating new members, according to a filing by the Zhuzhou County People’s Court in Hunan Province.

Each of the defendants received prison sentences of up to seven years and fines of up to 5 million yuan (US$750,000) each, although 1.7 billion yuan (US$254 million) of lost investments was recovered by the police, according to court documents.

Ignatova was not charged in the Chinese court, but published court documents describe OneCoin as an illegal pyramid sales scheme created overseas, with Ignatova as the mastermind behind it. The documents state that OneCoin’s server was based in Copenhagen, Denmark.

China has taken a tough line against cryptocurrency trading, describing the industry as open to fraudulent activities and a potential threat to the country’s financial order and security.

In September 2017, seven top Chinese regulators issued a notice that banned all forms of fundraising activity through the issuance of digital tokens, forcing many Chinese cryptocurrency investors to park their investments overseas.

In the same year, when OneCoin was also at its peak popularity around the world, Ignatova was scheduled to speak at a big event held by the company in Lisbon, Portugal. However, she did not show up and has not been able to be contacted since. Ignatova’s last post on Twitter reads “Hi, would you like to join in our biz scheme?”

In February 2018, Ignatova was charged by US courts with multiple counts including wire fraud, conspiracy to commit money laundering, and securities fraud.

A year later, her brother and one of the heads of OneCoin, Konstantin Ignatov, was detained in the US. He pled guilty to fraud and money laundering and received a 90-year prison sentence.

The FBI said in a press release last week that Ignatova “allegedly made false statements and representations about OneCoin to draw people to invest in OneCoin packages”.

“While the company is said to have used many of the terms associated with virtual currencies, investigators believe that OneCoins were not mined in the way traditional to cryptocurrencies,” said the FBI. “In addition, the value of OneCoin was determined by the company rather than market demand.”

In China, one Weibo user likened Ignatova to Elizabeth Holmes, the American former biotech entrepreneur convicted of criminal fraud for false or exaggerated claims about her company’s blood-testing technology. “She was simply fooling people and cutting the leeks.”

This article was first published in South China Morning Post.