OneCoin – it’s never too late to learn
Starting from the bottom of the list, Karl Sebastian Greenwood and Ruja Ignatova, also known as the “Cryptoqueen,” were accused of running a financial pyramid known as OneCoin. Greenwood was apprehended and sentenced to 20 years in prison in the US, but the whereabouts of the Crypto Queen remain unknown.
The core of this controversial case is as follows: OneCoin, established in 2014, was marketed as a business selling educational materials and video tutorials for cryptocurrency users. The “OneCoin token” was presented as an educational tool with no intrinsic value or underlying assets, solely intended to help holders comprehend crypto assets. Technically, OneCoin is not a cryptocurrency since it is not implemented on a blockchain, and all the keys are exclusively held by OneCoin management.
Despite the creators openly stating that OneCoin has no financial value, users of the platform purchased the coins and sold them for fiat currency on the internal platform. As a matter of fact, it turned out that OneCoin acquired speculative rather than educational value. During its existence, over $4 billion was invested in OneCoin (according to the IRS).
It is worth noting that from the very beginning of OneCoin’s existence, media outlets and governments of many countries repeatedly warned people that it was a pyramid scheme. Nevertheless, billions of dollars were invested. In 2023, when one of the OneCoin creators was caught and brought to justice, this scheme came to an end. However, it is important to note that the Crypto Queen is still at large, so the IRS’s triumph may be premature.
Crypto-church life in New Hampshire
In October 2023, Ian Freeman (notably, his surname translates to “free man”) was sentenced to 96 months in prison and two years of probation. He was also fined $40,000 for laundering over $10 million through fraudulent schemes and scams. Freeman completely disregarded anti-money laundering legislation by refusing to conduct business within the bounds of the law. Evidence presented during Freeman’s trial alleged that he and his co-conspirators operated financial institution accounts in the names of religious organizations, including the Shire Free Church, the Church of the Invisible Hand, the Cryptocurrency Church of New Hampshire, and the Peace Church of New Hampshire. Freeman openly urged his clients to lie to financial institutions and classify their transactions as church donations. He failed to pay taxes from 2016 to 2019 and concealed his income from the IRS.
Hacker James Zhong
The case of James Zhong (listed seventh) is much simpler compared to the aforementioned cases – he simply “stole” about 50,000 BTC on the Silk Road darknet site in September 2012. For ten years, he attempted to conceal the stolen funds by transferring bitcoins to multiple addresses under his control. However, the authorities managed to track him down and confiscate BTC from Zhong with a total value of approximately $3.4 billion. The authorities did not hesitate to seize his assets, including shares, gold, silver coins, and bars (according to the IRS).
Cryptocurrency Oyster Pearl
Amir Bruno Elmaani, also known as Bruno Block, the creator of the Oyster Pearl cryptocurrency, was sentenced to 48 months in federal prison and fined $5.5 million for tax violations related to the Pearl token. Starting in 2017, Elmaani began promoting his cryptocurrency, Pearl, with plans to develop an online data storage platform where customers could purchase storage using Pearl tokens. Elmaani used friends and family to receive cryptocurrency income on his behalf and transfer the money into his accounts. He failed to file a tax return and claimed no income in 2018, yet he spent over $10 million on properties, including yachts and houses, during that same year. The estimated tax losses resulting from Elmaani-Block’s actions amount to approximately $5.5 million.
Moreover, tax evasion is only part of the story concerning Oyster Pearl. Not only were the promised goals not achieved, and the cryptocurrency fell victim to hacking attacks, but Bruno Block’s enrichment was likely the result of pump-and-dump schemes involving Oyster Pearl.
What do these cases have in common?
Examining each case individually, they do not stand out in terms of scale compared to other crimes on the list. What is more noteworthy is that all four cases involve actions committed in past decades, which highlights the slow nature of the US judicial system and government agencies in addressing the crypto industry. However, the presence of four cryptocurrency-related cases among the top ten fraud cases suggests that American authorities have more robust measures in response to cryptocurrency-related activities.
This material and the information contained herein do not constitute individual or other investment advice. The opinions of the editors may not align with those of the author, analytical portals, and experts.