David Pike, Pleads Guilty to Role in OneCoin Ponzi Scheme
A Florida resident confessed to participating in a
conspiracy to defraud a bank as part of the $4 billion OneCoin Ponzi scheme.
In a telephone hearing held in Manhattan federal court,
David Pike, 61, pled guilty to conspiracy to commit bank fraud. Prosecutors
asserted that Pike helped former Locke Lord LLP attorney Mark Scott launder
$400 million as part of the scheme. Pike could face up to five years in prison
upon being sentenced in January.
Scott himself was convicted of money-laundering conspiracy
and bank-fraud conspiracy in 2019. According to prosecutors, he had set up a
fake investment fund to process money from the person behind OneCoin, Ruja
Ignatova. The Bulgarian woman known as the ‘Cryptoqueen’ has been missing since
OneCoin came under suspicion in 2017. Meanwhile, Ignatova’s brother, Konstantin
Ignatov, pled guilty to fraud and money laundering. He also testified against
Scott in his trial. While convicted, both men are still awaiting sentencing.
OneCoin Ponzi scheme
While some critics of cryptocurrencies claim that Bitcoin
itself is a Ponzi scheme, the OneCoin project is one instance that actually
proved to be one. OneCoin claimed to be a cryptocurrency with a private
blockchain and a platform for learning about crypto. The firms OneLife,
OneAcademy and OneWorldFoundation were also part of the scheme.
Its main business was selling “education packages” ranging
from $110 to $55,555, offered through OneLife and OneAcademy. OneWorldFoundation
was purportedly a children’s charity that accepts donations through OneCoins,
PayPal, bank transfer, and credit and debit cards. Each package included
“tokens,” which could be assigned to “mine” OneCoins.
However, it turned out that OneCoins had no value and could
not be used to purchase anything. In reality, OneCoin has been operating as a
global multilevel marketing network, in which it paid commissions to members
for recruiting other people to buy OneCoin packages. Between 2014 and 2016,
OneCoin generated €3.4 billion ($4 billion) in revenue. Based in Sofia,
Bulgaria, OneCoin claimed to have more than 3 million members worldwide at its
peak.
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