Money laundering and securities fraud indictment unsealed against key promoter of OneCoin

By Christine Duhaime | May 6th, 2020

After two years, the Attorney General for the Southern District of New York has unsealed the indictment against Karl Sebastian Greenwood, a promoter of the Bulgarian initial coin offering, and supposed digital currency called OneCoin. Greenwood was allegedly extradited to the US from Thailand in 2018.

Indictment unsealed

In the indictment, Greenwood is charged, inter alia, with money laundering, securities fraud and wire fraud in connection with promoting OneCoin for four years; his promotional efforts alone allegedly resulted in the payment by investors of over US$1 billion to OneCoin. Greenwood is incarcerated pending his trial at the New York City MCC.

In 2016, here, Greenwood gave an interview on his role in OneCoin, wherein he disclosed he knew nothing about the product he was promoting and yet promoted and sold it to millions anyway.

Greenwood, the unidentified co-founder?

Although the indictment refers to Greenwood merely as a promoter, he may be the unnamed OneCoin co-founder in the criminal complaint filed against Ignatov.

Activities in Colombia

In a YouTube video (available here), Greenwood shows viewers a Porche in Panama, and then a OneCoin private jet filled with other OneCoiners, taking off on a trip to the cocaine capital of the world, Medillín, Colombia, to sell OneCoin. In the video, he says he is going to Colombia for ‘The People,’ to change history. The video then cuts to champagne being poured on the jet for the OneCoin people.

A fraud through and through

OneCoin executives have given statements informing US government agencies that OneCoin was a fraud.

Investors from around the world lost between US$2 billion to US$3 billion investing in OneCoin from 2014 to 2016, and more after that period of time. It was sold using aggressive multi-level marketing (“MLM“) techniques and networks. It was pitched as a proof of work digital currency that had a native Blockchain with an explorer, and that also had a digital currency exchange attached to it to offer liquidity to purchasers of OneCoin so that they could cash out.

Over 3.5 million people bought into OneCoin but they were buying nothing at all. Despite being represented as such, OneCoin was not a digital currency; did not have a Blockchain; did not have a Blockchain explorer; did not have a digital currency exchange; and purchasers did not have the ability to exit out of their investments.

Tattoo-loving brother; diamond-loving sister

Here, you can read how a team of two, comprised of a tattoo-loving brother called Konstantin Ignatov and a diamond-loving sister called Ruja Ignatova, seem to have led the operations of OneCoin. Sister and brother were indicted in respect of OneCoin; brother was arrested and sister disappeared in October 2017. But to where – Colombia? Vienna? Canada?

Private companies – laundered money

Konstantin Ignatov pled guilty to money laundering and bank fraud and testified in a criminal proceeding that OneCoin was a fraud. He also testified that he left his job as a forklift operator and became an executive at OneCoin, eventually running the organization when his sister disappeared. He testified that he was involved in creating companies which were used to hide proceeds of crime from the OneCoin fraud and that such activities involved his sister and others, including Amer Abdulaziz, Irina Dilkinska and Gilbert Armenta. The latter was said to be the boyfriend of Ruja Ignatova.

Ruja Ignatova discusses Russians

In the audio recording, below, Ruja Ignatova tells Armenta to be “fucking careful” and that he can’t imagine what Russian guys can do. She tells him to quit using email and says that she can get whatever she wants in 24 hours.

“Be fucking careful!” (Source: Inner City Press)

The man with the diamond skull and crossbones walking stick

OneCoin had another material person who was involved in its sales and promotion – Juha Parhiala. Over the years, he joined Greenwood and Ignatova to ramp up OneCoin sales. All three were frequently photographed together promoting OneCoin. Parhiala is notable because he carries a diamond skull and crossbones walking stick.

Parhiala got €20 million per month selling OneCoin to the public

There appears to be a debate as to whether Greenwood or Parhiala were the top-selling salesmen at, and promoters of, OneCoin. At the beginning of 2016, Parhiala stated that he was the top salesman and promoter, earning commissions of US$4 million a month.

However, Ignatov testified that Parhiala actually made more, namely €20 million per month in commissions, selling OneCoin. If he earned such commissions over two years, that’s €480 million in money that came from investors. Parhiala now appears to be selling gold on Zoom connected to an office in Miami.

If €20 million per month in commissions seems like a lot – Ignatov then testified that Greenwood earned way more than Parhiala selling OneCoin. If that’s the case, it means that Greenwood raked in hundreds of millions of dollars selling OneCoin, and millions more than Perhiala. If the testimony of Ignatov can be believed on this point, it suggests that Greenwood is the anonymous OneCoin co-founder referred to in the criminal complaint against Ignatov.

3,000 coin millionaires

In this video, Greenwood pitches the MLM scheme that fuelled OneCoin sales at a conference of the OneCoin faithful saying it would generate “3,000 coin millionaires” among them.

Ignatova emerges somewhere in 2018

In Ignatov’s testimony, he appears to have stated that he had no communications from his sister since her alleged disappearance in October 2017. If that was the testimony, it can’t be accurate because law enforcement located a power of attorney executed by Ignatova in 2018, giving Ignatov power over assets registered in her name. That means that Ignatova met with a notary in 2018 in person to execute it, and through a proxy or in person, delivered the power of attorney in the original to Ignatov. The notary who witnessed the execution of the power of attorney with Ignatova in 2018, is the last person that anyone can identify who saw her.

Where is the Aurum gold ICO?

We don’t hear much about it but OneCoin had another coin project called “Aurum Gold Coins”, which was alleged to be backed by “real and solid gold” allegedly stored in vaults all over the world. It too was advertised as part of “one world,” similar to how OneCoin was advertised (here).

Aurum Gold Coins, part of the OneCoin Ignatova family

MLM networks

OneCoin was sold using MLM techniques. MLM activities are not illegal.

MLM networks involve sales activities that are direct, or person-to-person. The person at the top earns revenues for sales completed by everyone underneath him or her. For example, a digital currency exchange that pays a referral fee to refer a person to sign up to a digital currency exchange is a type of MLM – the more you refer, the more you potentially earn in revenues.

MLM activities cross the line into illegality when, inter alia, they are based on fraud, untrue statements or misrepresentations. Some MLM networks are structured as pyramid payments but that doesn’t necessarily make them illegal unless they are a Ponzi scheme and payments paid to first entrants comes from later entrants.

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