I listened to a podcast this morning that was attached to my usual, “Alexa, what’s the news” inquiry. At the end of my normal PBS quick-news summary was a financial BBC story on OneCoin, a cryptocurrency founded by Dr. Ruja Ignatova of Bulgaria. Out of intellectual curiosity, I had researched the phenomena of cryptocurrencies about a year ago just to understand the mechanics. The basics of the blockchain were easy enough to understand but the practicality of daily cryptocurrency use escaped me. If you aren’t a drug dealer or a terrorist trying to maintain a low profile, why you would want to use such a product? As an investment, the associated risk with cryptocurrencies was well beyond my comfort zone. While blockchain basics were easy to comprehend the overall financial structure was too convoluted. I had learned a lesson during my time in the Navy many years ago about gambling; if you don’t thoroughly understand the game, don’t play.
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| Cryptoqueen Dr. Ruja Ignatova of Bulgaria |
The OneCoin story went on to describe the marketing behind that particular cryptocurrency. It seemed that, unlike other blockchain-backed cryptocurrencies, the creators said they were so backed but never provided customers with the ability to verify that status. The marketing effort was more cult-like. In one instance, Dr. Ruja walked out on a stage erected in London’s Wembley Stadium wearing an opera length red gown. The 90,000-seat stadium was packed with cheering fan-investors.
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| Dr. Ruja speaks to a cheering crowd in Wembley Stadium, London |
In typical Ponzi scheme fashion, investors bought token bundles representing “educational packages” that were without consequence in the grand plan. The tokens could then be used to “mine” OneCoins on servers located in Bulgaria and Hong Kong; no red flags there. Only certain large investors could exchange OneCoins for euros and then only in limited daily amounts. One way to become a large investor would be to recruit others to invest and become recruiters themselves. The higher you are in any pyramid scheme the better off you will be.
As I listened to the story, I wondered how you could get that many people to part with over $4 billion. I could see suckering a few people with some “magic beans” but how do you fill a stadium? Dr. Ruja Ignatova has disappeared, her brother, Konstantin Ignatov, who took over the company, was arrested and is serving 90 years in prison. The co-founder, Sebastian Greenwood, was arrested. China recovered $267.5 million and 98 people have been prosecuted. But the company is still functioning, and people are still buying into the get-rich-quick scheme. With all of this information out in the public domain and so easy to find with a Google search, how is it that people are still being conned? Where do you find that many gullible people?
I found the answer to my silly question when I turned on my television and saw…
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| Trump Rally |
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| Adoring fans offer up their first-born to the new Messiah. |
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