May 18, 2024

The Lacking Cryptoqueen: The Billion Greenback Cryptocurrency Con and the Girl Who Acquired Away with It, by Jamie Bartlett, Hachette Books, 320 pages, $29

Newcomers to bitcoin typically dismiss the cryptocurrency as a pyramid or Ponzi scheme. The OneCoin rip-off reveals what it actually seems like when a pretend blockchain serves as cowl for a multilevel advertising and marketing fraud that pays early buyers with funds from new marks.

Right here we see the near-messianic pageantry widespread to overhyped tasks. We see Matryoshka armies of worldwide holding corporations and frontmen. We see starry-eyed everymen scrambling to speculate each final household greenback in “instructional supplies” that include “free” cash (to keep away from triggering laws). We see Curaçaoan banking consortia, Maltese playing considerations, and a mysterious maven manipulating all the pieces behind the scenes earlier than absconding all of the sudden into the night time.

Jamie Bartlett’s The Lacking Cryptoqueen particulars the sleazy rise and unsatisfying fall of the OneCoin con whereas investigating the doable whereabouts of the swindler behind all of it: a runaway wannabe-fashionista from Bulgaria named Ruja Ignatova.

In an trade rife with swindles, OneCoin is in a league of its personal.

It’s common for cryptocurrency tasks to overpromise on expertise or skimp on safety, resulting in giant losses available on the market or in consumer wallets. It’s not regular for a cryptocurrency to be structured like a multilevel advertising and marketing scheme, paying “buyers” extra on an outlined schedule once they recruit others. Neither is it regular for the coin to be utterly managed by a for-profit firm with none precise blockchain in any respect, unbeknownst to the various keen “package deal holders.” Consequently, no different alleged cryptocurrency has managed to concoct a mammoth Ponzi scheme leading to $4 billion to $15 billion in losses. Solely Bernie Madoff can examine.

Ignatova had no experience in pc science or expertise. Her principal promoting factors have been that she was a marketing consultant at McKinsey—so spectacular—and favored to put on lengthy robes and purple lipstick. This, mixed along with her unique Germano-Bulgarian accent and hyperlinks with varied Sofia elites, proved sufficient to dazzle gullible targets into placing far an excessive amount of cash into her blockamamie scheme.

Bartlett, who chronicled the early bitcoin and up to date cypherpunk communities in his 2014 work The Darkish Internet, teases out what few threads we have now on the furtive Ignatova to weave a portrait of an bold and shameless con lady who stopped at little or no to venture the picture of herself that she needed onto the world. She needed to be wealthy, she needed to be glamorous, and he or she needed to be well-known. Precisely how she obtained there was not her concern.

In 2013, Ignatova teamed up with Sebastian Greenwood, a key grifter on this story, who was at that time hawking a “new Fb” multilevel advertising and marketing scheme known as SiteTalk. He was impressed by Ignatova’s “bitcoin, however for pensions” convention concoction and noticed a possibility to mix the hype-driven worlds of cryptocurrency and multilevel advertising and marketing to extract most earnings. They shamelessly ripped off an current hybrid known as BigCoin and slapped a brand new identify on it: OneCoin.

The masterminds behind OneCoin clearly thought little about such trifling particulars as launching a blockchain or coin economics. Slightly, they centered their energies on recruiting high multilevel advertising and marketing expertise: They poached high sellers from current pyramids and tried to promote them on the OneCoin concept. The pitch was mainly that this ball-gowned Bulgarian would kill bitcoin and “make you wealthy.” For no matter motive, this was sufficient to provide OneCoin momentum, and the rip-off began promoting itself.

One power of The Lacking Cryptoqueen is Bartlett’s capacity to mix gripping storytelling with the quite dry regulatory context and legalese essential to know how Ignatova pulled this off and simply how brazen the endeavor was. For instance, the OneCoin staff knew that if their pyramid offered cash immediately, they might simply run afoul of securities laws, as they might basically be paying commissions on inventory buying and selling. As an alternative, the staff offered “instructional supplies” about OneCoin that have been tied to “free cash.” A “starter pack” value €100, or $138 USD, for a PDF and round 200 cash; a “Tycoon Dealer” package deal would run you $6,900 for 5 PDFs and 28,000 cash.

When you offered Tycoon Dealer packages to different marks, you’ll get a lower of any gross sales they made after that; that is your “downline,” and it is the place the true cash is made in multilevel advertising and marketing schemes. The concept is to develop your downline as a lot as doable. In apply, this implies cajoling family and friends members into the pyramid. The highest tiny p.c, known as the “Crown Diamonds,” made off with tens of millions in downline commissions. The overwhelming majority made rooster feed, however there was all the time the promise that OneCoin would “go public”—be traded on a serious trade like Binance—and get a ticket “to the moon.”

The foreign money itself was an enormous pretend. Purchasers would see cash of their pockets after buying an academic package deal. However there was no blockchain there in any respect, only a database that may credit score and debit as requested—a minimum of often. The one trade on which OneCoin could possibly be traded, xcoinx, was secretly owned by OneCoin, which manipulated the value. One other strain valve was Dealshaker, supposedly an Amazon killer, the place OneCoin promoters may promote tchotchkes for his or her pretend cash. The web sites have been amateurish and hardly purposeful, with misspelled FAQ pages.

On paper, individuals have been millionaires. Xcoinx would restrict gross sales, set the value, and arbitrarily double the cash to make individuals really feel like they have been wealthy. They earnestly believed they might retire to a yacht someday. This hope was sufficient to maintain dupes holding the bag for a lot too lengthy; as Bartlett wrote his e-book, some cussed devotees have been nonetheless holding and buying and selling OneCoin. In the meantime, Ignatova and her co-conspirators handled the OneCoin financial institution accounts like private piggy banks, shopping for multimillion-dollar properties the world over and investing in sketchy tasks nevertheless they noticed match.

Ignatova and her cronies by no means cared about OneCoin. They did not care in regards to the concepts they threw round in public, like “banking the world’s poor” or the “monetary revolution” and even killing bitcoin. They needed to generate income and get out, and Bartlett marshals the panicked communications that present Ignatova scrambling for an exit whereas the worldwide monetary surveillance system crashed down onto her billion-dollar fraud. OneCoin stored chugging to the bitter finish, working on fumes and a phantom workers effectively after Ignatova disappeared someplace inside Greece in 2017. Bartlett’s greatest guess is that she resides in worldwide waters within the Mediterranean Sea.

This e-book is full of scurrilous subplots and cheesy characters, and it provides an illuminating have a look at the world of worldwide finance and the various traps that finally did OneCoin in. It comes at an opportune time, given the general public’s ample urge for food nowadays for a great rip-off story. Hulu’s The Dropout and Apple TV’S WeCrashed obtained loud buzz by dramatizing how narcissists can exploit techno-optimism and plain outdated human greed. The previous covers Elizabeth Holmes and her bloodsucking Theranos rip-off, whereas the latter tackles WeWork, Adam and Rebekah Neumann’s kombucha-soaked and Imaginative and prescient Fund-ed workplace cult.

Maybe we are going to see the same streamed or televised therapy of “Dr. Ruja,” as she insisted on being known as, and the black gap of the OneCoin world. Like Holmes and the Neumanns, she makes a terrific villain. However Ignatova is totally different, and arguably extra sinister, than these better-known charlatans.

Theranos and WeWork humiliated elites who poured of their cash and reputations primarily based on the allure and visions of their charismatic founders. These corporations actually harm many common individuals alongside the way in which; WeWork exploited its staff, whereas Theranos uncovered sufferers to presumably lethal well being misinformation. However by way of funding, it was largely the well-to-do who have been on the hook.

With OneCoin, in contrast, Ignatova and her staff of attorneys, moneymen, model consultants, and multilevel advertising and marketing maestros shamelessly focused and stole from common individuals—in lots of circumstances, among the world’s most susceptible. Even Ignatova’s brother Konstantin, who ran the rip-off after Ruja disappeared, felt a twinge of guilt as he hawked OneCoin packages to unsuspecting farmers in Mbarara, Uganda.

The complication with multilevel advertising and marketing frauds and Ponzi schemes is that the victims are sometimes accomplices. They’re so blinded by guarantees of riches that they harangue family members to affix, utilizing the identical lies that labored on them. This may encourage individuals to double down on their beliefs, as a result of admitting that you simply have been suckered right into a fraud additionally means admitting that you simply lured your loved ones with the identical false guarantees.

The Lacking Cryptoqueen is a captivating look into the schematics and psychology of a rip-off. Let’s hope extra individuals study in regards to the OneCoin debacle and the lady behind it. On a regular basis individuals want to guard themselves towards such predation, whether or not or not Ignatova ever sees her day in courtroom.

This text initially appeared in print beneath the headline “ScamCoin”.