Legal

Investor sued cryptocurrency issuer OneCoin over $4 billion pyramid scheme

May 7, 2019, 6:45PM EDT

Cryptocurrency issuer OneCoin, which allegedly ran a $4 billion pyramid scheme, has been sued by an investor who's seeking class-action status for the suit to include others who say they were scammed.

“OneCoin’s principals and promoters duped investors worldwide into a reported $4 billion in investments in a cryptocurrency that never really existed," the plaintiff's lawyer David Silver told The Block. "The size of the scam is staggering, as is the audacity of the people who not only pulled it off but who continue to defend it and promote it to this day.”

The lawsuit says the investor, Christine Grablis lost $130,000 since she first invested in OneCoin in 2015.

According to the complaint, OneCoin falsely advertises to its customers that the company is operating "mining pools" that can be accessed through purchasing its "tokens." However, "no mining of OneCoins ever occurred. The company simply created OneCoins at will without adhering to any of the actual principles of blockchain technology," states the complaint. 

The document also alleges that OneCoin encourages investors to recruit new members by compensating them with commission fees, claiming that members can receive a commission of 10%-25% for every new member that purchases the company's trader package.

Through this marketing strategy, OneCoin has recruited over 3 million members worldwide, the company claimed. The price of a OneCoin also grew from $0.56 to about $33.60 by January 2019. 

Bloomberg writes that OneCoin founder Ruja Ignatov and her brother Konstantin have been charged with conspiracy to commit wire fraud in connection to the scheme.