FBI’s Most Wanted Woman Took Over £2bn From Investors in Crypto Ponzi Pyramid Scheme

Ignatova gained notoriety and influence in 2014 when she and her co-founder, Karl Sebastian Greenwood, started pushing their new company OneCoin as the next ‘big thing’ in cryptocurrency – claiming it would eventually overtake world leader, Bitcoin. The pair hosted webinars and conferences, paid for placements in Forbes magazine, and claimed to live lavish lifestyles with properties across the world, all to encourage investors to deposit funds into an account that would enable the purchase of OneCoin packages.

OneCoin was run as a pyramid or Ponzi scheme where investors were encouraged to also recruit friends and family to buy into the scheme to access higher value ‘packages’, from ‘starter’ to ‘tycoon trader’. The scheme began to fall apart when investors could no longer sell their investments for the purchase price, and media outlets began to report that the whole operation was a scam.

It was found that there was no blockchain behind the currency and that the value was being determined and manipulated by OneCoin itself rather than by genuine fluctuations in the blockchain – which is how cryptocurrencies work – so the numbers seen by investors were entirely made up. While her associates have been tried for their involvement in the scam, Ignatova was last seen boarding a commercial flight from Sofia to Athens and remains wanted by the FBI.

While the OneCoin scheme may seem an extreme example of a cryptocurrency scam, that does not mean there are not lessons to be learned; investment scammers are capitalising on the ‘buzz’ around crypto and convincing victims to part with significant amounts of money.

It is vital that anyone considering a cryptocurrency investment familiarises themselves with the red flags and understands how to avoid being scammed. Some warning signs include:

• Big returns? Big risk: Websites or social media posts promising significant returns are unlikely to be genuine and use inflated promises to access your finances. Crypto’s value goes up and down frequently, so there are no guarantees on how investments will perform.
• Elaborate marketing and celebrity endorsements: Scammers often use flashy adverts featuring claims of impressive returns and even celebrity testimonials to try and add legitimacy to the scam. In 2021, Action Fraud received “over 500 investment fraud reports which referred to a bogus celebrity endorsement”.
• Trojan horses and unfamiliar software: Anyone asking you to allow them remote access to your devices disguised as ‘helping you set up’ is likely looking to access your personal information and accounts.
• No ICO whitepaper: Every cryptocurrency has a whitepaper as part of the Initial Coin Offering (ICO). Fraudulent or scam currencies will either have no ICO whitepaper or be poorly written or difficult to understand.

You can also take steps to ensure that you are keeping yourself safe when considering investing in cryptocurrencies, including:

• Never allow someone else – even someone claiming to be a legitimate broker – to open a crypto wallet for you or have access to your login details, passwords, or devices.
• Take time to research and assess what you can afford to invest. If a ‘broker’ pushes you to spend money or cryptocurrency urgently, walk away.
• Speak to an adviser regulated by the City watchdog, the Financial Conduct Authority (FCA) – spending a little money initially to save your finances in the long term could be a wise investment!
• Use the FCA’s Warning List to check if the firm you’re dealing with is on their radar as one to avoid and double-check the firm’s contact details on the FCA website.

Scammers – like Ignatova – are capitalising on the interest in cryptocurrency by using promises of financial ‘quick wins’ to persuade would-be investors to transfer money to build cryptocurrency portfolios. Many people see cryptocurrency as a new and exciting investment, hoping for large and quick financial gains, but it is not without considerable risk, given that many of the firms involved are unregulated.

Authorised Push Payment (APP) fraud, or bank transfer fraud, is where the scammer gains the victim’s trust through online marketing techniques and manipulation. Usually starting with a small, low-risk investment, the victim is persuaded to send money from their bank account. This then quickly escalates to more regular and higher payments.

As the fraud victim believes the transfer is genuine and legitimate, the money is often lost before any alarm bells ring, and the victim may be too embarrassed to do anything about it. These payments are usually made abroad, often making it impossible to trace or recover what has been lost.

Urgently contact the police and your bank if you think you may have been scammed. You can also report any suspected scamming activity to Action Fraud, the National Fraud and Cyber Crime Reporting Centre.

There may be a criminal investigation by the police if you have lost money due to a fraud. If a criminal prosecution is successful, the court can order compensation. But recovering this is not always possible, particularly if the fraudster is overseas or has no assets with which to pay any compensation.

In addition to criminal proceedings, you may have the basis of a complaint against your bank, if you feel that they did not do enough to protect your account, by raising a claim with the Financial Ombudsman Service (FOS). FOS is an independent Government-backed body responsible for investigating disputes between consumers and financial institutions; it recently reported that over half of all investment scams they investigated in the first quarter of the 2022/23 financial year were related to cryptocurrency fraud.

Sarah Spruce, Head of TLW Solicitors’ Professional Negligence team, commented:

“While the OneCoin case is an extreme example of cryptocurrency fraud, it is not unique in its operation, and we are helping a significant number of clients who have lost money in very similar schemes.

There are a range of factors that make crypto an attractive option for investors, but that also makes it a target for scammers; if you’re considering investing, make sure you have really done your homework and never invest more than you can afford!

If you or a loved one think you have been the unfortunate victim of a cryptocurrency scam, then don’t be ashamed or embarrassed. You are by no means not alone, so get help as soon as possible. Contact one of our team and we’ll have a no obligation and confidential discussion to explore your options.”