Show Notes
Cold Open
SFX: airport ambiance
In March 2019, Konstantin Ignatova scanned the board of departures until he found the Turkish Airlines flight that would take him home.
His flight was departing soon. But Konstantin had just enough time to accomplish his objective.
The thirtysomething hurried through Los Angeles International Airport until he found his destination:
A Hudson News stand and booksellers.
Konstantin couldn’t believe his eyes. There it was, a new novel by his favorite American author, Stephen King. The Outsider. A murder mystery with supernatural elements.
Sounded promising. This would make the 14-hour flight to his native Bulgaria go much faster. Thank god for Stephen King.
Konstantin picked up a copy, took it to the register, and made his purchase.
Then he weaved through the crowded concourse to the gate for his flight. Passengers were already queuing up to board. He spotted his traveling companion, Duncan.
Hey boss. Made it just in time.
Konstantin recently hired the heavyset South African IT specialist to help him run the family business. By all outward appearances, the tattooed, muscular Konstantin looked like an amateur MMA fighter—and that’s what he’d told US Customs to get into the country.
In reality, he was the head of one of the world’s biggest cryptocurrencies. Problem was, he had no idea how cryptocurrency actually works.
Konstantin approached the gate agent with a smile.
Is business class boarding yet?
He showed his passport.
Through there please, Mr. Ignatova.
She pointed towards a nearby set of double doors. Strange, they didn’t look like an airplane jetway, but Konstantin walked through them anyway.
Almost immediately, five men in suits pounced and handcuffed him.
We’re with the FBI. You’re coming with us.
They took him through a side door. Soon, they arrived in a bare interrogation room in the bowels of the airport. They sat him down.
The lead law enforcement agent sat across from him.
Where is your sister?
Months earlier, Konstantin had replaced his older sister Ruja as CEO of her cryptocurrency company, OneCoin.
Konstantin didn’t know what to say.
He knew all of the rumors, of course. That Ruja fled to Dubai and was living in hiding. That she got plastic surgery and was living large on a Mediterranean yacht. That an angry OneCoin investor also known as Bulgaria’s “cocaine kingpin” had ordered her murdered, dismembered, and dumped into the Ionian Sea.
Konstantin didn’t know what to believe. So, he told the truth.
I don’t know. I’ve not seen Ruja for 18 months.
Well, it was partly true. He had seen Ruja more recently than 18 months ago—we think. But he had no idea where she was now.
All he knew was that he was in legal jeopardy. But his sister was still at large. And the woman known as the Crypto Queen had done a good job covering her tracks.
On this episode: cryptocurrency, multi-level marketing, high-stakes money laundering, love affairs, and one of the most successful cons of all time.
I’m Keith Korneluk and you’re listening to Modem Mischief.
You're listening to Modem Mischief. In this series we explore the darkest reaches of the internet. We'll take you into the minds of the world's most notorious hackers and the lives affected by them. We'll also show you places you won't find on Google and what goes on down there. This is the story of Ruja Ignatova.
Act One
It’s been said that cryptocurrency is one of the most significant innovations of the 21st century, with the power to revolutionize economics. Right up there with Google Glass and e-cigarettes.
But we can’t tell you the full story of the birth of cryptocurrency, because there are so many unknowns.
Even so, we’ll give it a shot.
The 1990’s the Internet became a gathering place for libertarians who resented government intrusion in their lives. Some of them saw computing and the Internet as tools that could fight government oppression.
They called themselves “Cypherpunks.” In 1992, three San Francisco-area cypherpunks started an emailing list appropriately called “the Cypherpunks Mailing List.”
One of their biggest grievances was currency.
Currency is an essential human need. We use it to exchange goods and services. Today, almost all currencies are issued by central governments. And to these cypherpunks, that’s exactly the problem. Governments can, and do, manipulate the value of their currencies for all sorts of reasons, many of which have little to do with economics.
What was needed, these cypherpunks argued, was a new form of currency. Independent of any government, and free from manipulation.
For all of human history, we’ve used all sorts of objects as currency, from paper dollars to gold to cowrie shells to thousand-pound stone discs, like they use on the Island of Yap. So why not digital coins?
But this led to another problem. How could this possibly be independent? Whoever created a digital currency would be able to control it. How could they be trusted not to manipulate it just like a government could?
There were many attempts to solve this problem, but none of them stuck, until November 2008, when an email arrived on the Cypherpunks Mailing List:
I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party, it read. It’s very attractive to the libertarian viewpoint if we can explain it properly. I’m better with code than with words, though.
The email was from a user who called himself Satoshi Nakamoto, but nobody knew if that was his real name. Nakamoto titled the email “Bitcoin: p2p e-cash paper.”
This was how the world’s first cryptocurrency, Bitcoin, began.
But Nakamoto’s real innovation was the blockchain.
Bitcoins are released in batches, or “blocks.” In January 2009, Nakamoto spawned the very first Bitcoins from a “genesis block.” Every 10 minutes, a subsequent block is spawned from the previous block, creating a chain—hence the name blockchain.
A blockchain is a record of every piece of cryptocurrency, which keeps track of each time it changes hands. A blockchain is the foundation of any legitimate cryptocurrency, and it must be accurate, independent, and objective. Nakamoto used peer-to-peer networking to host the blockchain on thousands of computers, ensuring that it couldn't be tampered with.
That’s the first thing you need to know about cryptocurrency.
The second is how coins are mined.
Only 21 million Bitcoins will ever exist. Blocks of coins will continue to be released every ten minutes until 2140, when 21 millionth and final one generated. Why only 21 million Bitcoins? Like we said, governments increase the amount of available currency all the time, which leads to inflation. Satoshi Nakamoto’s solution was to create 21 million—and only 21 million—Bitcoins. No more, no less.
Once the coins are released, anyone can “mine” them by solving math equations. Usually you need sophisticated computer processing power, which is why crypto brokerage companies typically mine them and not the average person. From there, crypto can be exchanged for real money, and then used just like any other currency.
But what is a Bitcoin or any other piece of cryptocurrency actually worth?
That brings us to the third and final thing you need to know about crypto: the value is a function of supply and demand. Since Bitcoin and other legitimate cryptocurrencies have a fixed amount of coins available, this means that their value is only determined by how much people want them.
The first Bitcoins were sold for literally one cent apiece. Now, one Bitcoin is worth about $26,000 (at the time of this recording). All because of high demand for the product.
The other members of the Cypherpunk emailing list were skeptical that Nakamoto’s invention would work. But almost immediately after Nakamoto introduced Bitcoin, the value began to climb. Soon, there were stories about early investors who paid a pittance for a few coins and then watched their value explode. Like Kristoffer Koch, who bought 5,000 Bitcoins for $20, then watched their value climb north of $890,000.
By creating Bitcoin, Nakamoto created the world’s first stable and independent cryptocurrency. And then, he disappeared from the Internet and hasn’t been heard from since.
SFX: alarm, with a voice shouting “Foreshadowing!”
For years afterward, various theories have been proposed as to Nakamoto’s real identity. Was he an out-of-work California college physics professor in his 60s named Dorian Satoshi Nakamoto? Or a computer programmer named Nick Szabo? Or Elon Musk?
We don’t know. What we do know is that Nakamoto created Bitcoin partly in response to the 2008 financial crisis. Within the code for Bitcoin’s genesis block, Nakamoto hid a link to a London Times article about the English government bailing out banks.’
The financial crisis is also what brought Ruja Ignatova into the crypto sphere.
Ruja was born in 1980 in the port town of Ruse, which was then part of the People’s Republic of Bulgaria. Her father Plamen worked as a mechanical engineer, and her mother Veska was a nursery teacher.
The Berlin Wall was torn down in November 1989. About two months later, the Bulgaria National Assembly voted to abolish the Communist Party. Now free to pursue better opportunities, Plamen and Veska moved their family to Schramberg in southwestern Germany. By then, they’d also had Ruja’s younger brother, Konstantin.
As a child, Ruja was standoffish, but she excelled at scholastics. She often told friends, her goal was to become rich by the time she turned 30. At 18, she got a scholarship to Germany’s Konstanz University, where she got a PhD in law. At the same time, she completed an online degree in economics from the University of Hagen. After Konstanz, she attended Oxford University, where she got a master’s in comparative European law.
As an adult, Ruja was a striking woman, tall with jet black hair and often red lipstick, and almost always wearing designer clothes.
It was also during her time at law school that she met a German law student named Bjorn Strehl. He was from Frankfurt and specialized in real estate law. He was shy and much less ambitious than Ruja, but they fell in love and married.
Their marriage wasn’t one of proximity. As their education came to an end, Bjorn moved to Frankfurt and set up his law practice. Meanwhile, Ruja returned to her homeland. Now free from communism, Bulgaria was prospering, and Ruja sensed opportunity. She got a high-profile job at McKinsey & Company’s branch in Sofia, the capital of Bulgaria. McKinsey is an international management firm, and she advised big banks like Sberbank, Allianz, and UniCredit.
But then, in 2008, a little thing called the financial crisis hit. McKinsey closed its Sofia branch, and Ruja was out of a job.
A setback, but also an opportunity to pursue her own business interests. There was an ill-fated venture with the Waltenhofen Gussworks. Ruja and her father Plamen bought a German steel factory and proceeded to treat it like their own personal piggy bank before selling it off for literally one euro. It took the German legal system seven years to catch up to Ruja, and even then it could only levy an 18,000 euro fine–which to her was a pittance.
She set up a hair salon in Sofia with a celebrity stylist friend. She considered launching a line of cosmetics called RujaNoir. Above all, she networked, ingratiating herself with Bulgaria’s political, economic, and social elites.
Still, none of this promised to make her wealthy. But then, Ruja heard about cryptocurrency and its stories of sudden wealth. Her mind spun with possibilities. Sure, she could acquire crypto herself and wait for it to accrue value. But crypto could also be used as a financial instrument. Soon, she came up with an idea to fund pension plans using cryptocurrency.
This took her to a cryptocurrency conference in Singapore, where a fateful meeting would change her life.
His name was Sebastian Greenwood. He was a 33-year-old fast-talking PR specialist from Sweden whose friends nicknamed him “Flash” thanks to his love of expensive clothing. A fashionista herself, Ruja was drawn to him.
Sebastian hailed from the world of multi-level marketing.
The concept of multi-level marketing is simple: MLM companies employ salespeople, who recruit other salespeople from among their friends and family. They then earn a commission on both their own sales as well as their recruits’ sales.
It works the exact same way as a Ponzi scheme, but there’s one important difference. A Ponzi scheme promises a product but never delivers. A multi-level marketing company actually does sell products.
Multi-level marketing isn’t illegal, but the reality is that only a small percentage of people at the very top ever make money. The vast majority make nothing.
Previously, Sebastian was a PR specialist for a social media company called SiteTalk. It was promoted as the next Facebook, and it used a multi-level marketing structure.
Sebastian left his wife Helen and two young children behind in Stockholm to move to Asia, where he would promote SiteTalk. But SiteTalk wasn’t nearly as popular as Facebook, and it quickly went under.
Sebastian needed a new gig. Just then, he got a message from a SiteTalk colleague named John Ng.
In China, Bitcoin was hugely popular. People were showing up at brokerage companies with plastic bags full of cash hoping to buy some.
SiteTalk had also been popular in China and other Asian countries. This gave Ng an idea: what if you could create a cryptocurrency, and then sell it with multi-level marketing?
Ng called this new cryptocurrency “BigCoin,” and Sebastian was onboard.
When Ruja presented her plan for a crypto-backed pension plan in Singapore, Sebastian was in the audience. Her presentation wasn’t memorable, but Sebastian saw something in her—Ruja’s legal expertise and business acumen would surely help BigCoin.
Or maybe, his interest was more carnal. Although it’s never been proven, it’s most likely the two began an affair.
Ruja was skeptical about MLM. She thought it was one step away from a scam. But Sebastian still convinced Ruja to come aboard as BigCoin’s legal advisor.
John Ng was delighted to have a brilliant businesswoman with a legal degree on the team. But Ruja and Sebastian weren’t quite as impressed with John Ng. They felt he wasn’t ambitious enough. They thought they could do better.
And so, they stole John Ng’s idea. They would create their own cryptocurrency fueled by multi-level marketing, and they would call it OneCoin.
By day, Ruja and Sebastian worked to promote BigCoin. By night, they met at the business lounge in Hong Kong’s Harbor Plaza Metropolis Hotel to plot OneCoin. They secretly hired sales staff and designed the compensation plan. All the while, they continued attending BigCoin events like nothing was wrong.
Throughout it all, Ruja was well aware that it could all fall apart. At one point, she emailed Sebastian:
Exit strategy: disappear and let someone else take the blame.
Finally, in July 2014, Sebastian was scheduled to speak at a BigCoin event in South Korea. John Ng was busy overseeing the many logistics involved, including sending a car to the airport to pick up Sebastian.
The day Sebastian was set to arrive, Ng got a call from his driver.
Boss? Greenwood never showed.
This wasn’t like Sebastian. Ng fired off a text to his PR expert.
Sebastian, is everything all right?
Soon, Ng got a response:
I’m very sick.
Then Sebastian sent a selfie. He was in a hospital bed connected to various tubes. But something about it seemed staged. Ng had the sinking feeling that Sebastian and Ruja screwed him.
Ruja and Sebastian didn’t look back. They had a cryptocurrency to launch. But they had no idea if it would work. Little did they know, it would work too well.
Act Two
And now, please welcome, the co-founder of OneCoin…Dr. Ruja!
Sfx: scattered applause.
Ruja Ignatova walked to the podium inside the conference room at the Marina Congress Center in Helsinki. She took the mic from Sebastian Greenwood and gave him a hug–one that some would say lingered too long.
It was about two months after she and Sebastian ghosted John Ng. Since then, they’d worked nonstop to get OneCoin off the ground. So far, they had little to show for it. They’d only sold 27 “Starter Pack” OneCoin packages worth 100 Euros each
Ruja looked over the crowd. If you could call it that.
She’d made a deal with her sales rep in Helsinki: if he could convince 50 people from the multi-level marketing industry to show up, she’d fly over from Bulgaria to speak. She never expected he’d pull it off.
Even so, fifty people was barely enough to fill a quarter of the seats. Ruja took a deep breath and began her speech.
All of you are sitting on a billion dollar opportunity. OneCoin is poised to become one of the top three cryptocurrencies in the world. It won’t just be the next Bitcoin. It will be better than Bitcoin.
Several audience members leaned forward.
Like Bitcoin, OneCoin is a fixed amount cryptocurrency. It will be mined just like Bitcoin. Ten thousand OneCoins will be released every ten minutes.
She watched the audience try to digest all this. These were no “tech bros,” savvy with the ins and outs of cryptocurrencies. These were multi-level marketing salespeople. Wisely, she pivoted to MLM speak.
Here’s the deal. Unlike cosmetics or cleaning products or Tupperware, OneCoin is the only MLM product that is guaranteed to increase in value. If you become a OneCoin promoter, you get a 10% commission on each OneCoin you sell. You get a further 10% each time that OneCoin is sold afterwards. As your commissions increase, you’ll climb our tiered promoter system. If you bring in over 1 million euros a month, you’ll qualify for the highest rank: Crown Diamond.
One raised his hand.
But like…how much is a OneCoin worth?
Ruja smiled. To start, half a euro. But we expect that to climb exponentially.
How many OneCoins will exist?
As you know, there are only 21 million Bitcoins in existence, and many haven’t been mined yet. OneCoin will have 2.1 billion—and only 2.1 billion. And they’ll all be backed up by the lasted in blockchain technology.
What Ruja neglected to mention was that the blockchain didn’t yet exist. She’d hired an Indian company to build one, but it wouldn’t be ready for months.
Like we said, all cryptocurrency is spawned from a “genesis block,” the first block on the blockchain. Since there was no blockchain, this meant that Ruja, Sebastian, and their team were selling OneCoins that didn’t yet exist.
The Helsinki presentation went better than Ruja expected. Within weeks, customers were buying “Tycoon Trader” packages of OneCoins worth 5,000 euros a pop. Their sales force was expanding, and promoters around the world were requesting Ruja and Sebastian to come preach the good word of OneCoin in their cities.
They achieved what’s known in the multi-level marketing game as “momentum.” Promoters were recruiting other promoters, and commissions were piling up. The fire was lit, and now they needed to fuel it.
All of this before OneCoin was live. All of this without an actual blockchain.
By the time Ruja and Sebastian finally did launch OneCoin’s blockchain in January 2015, they’d already sold 16.7 million euros worth of OneCoins.
They launched the OneCoin blockchain at Hong Kong’s Panda Hotel, where around 500 guests gathered to watch “Dr. Ruja” launch OneCoin’s genesis block, the first batch of coins from which all subsequent OneCoins would be derived.
Onstage was a translucent orb displaying a countdown clock inside. When it reached zero, Ruja touched it. The orb changed color, gold confetti fell from the ceiling, and everyone waited 10 minutes for OneCoin’s servers in Bulgaria to generate the coins.
All of it was for show, of course, but at least now customers could start seeing OneCoins in their virtual wallets.
At the same time, Ruja and Sebastian launched OneExchange, an in-house brokerage site that would allow OneCoin investors to trade their coins for actual euros, at half a euro apiece–which Ruja said was expected to climb.
Using an in-house brokerage site admittedly wasn’t the best look—why should the company that created OneCoin control where and how it could be sold? Ruja reassured investors that in a few months OneCoin would be partnering with an independent brokerage site called xcoinx.
There was another anomaly that would have spooked a savvy crypto investor. Both OneExchange and xcoinx were supposed to allow customers to see the entire blockchain—again, that’s the whole point of a blockchain, to create a public record of each transaction.
Instead, OneExchange had something called a “blockchain display,” which only showed a small portion of transactions at a time.
Most OneCoin customers didn’t notice, or if they did, failed to understand what they saw. They were just happy to invest in what they believed would be the next Bitcoin.
After launching their so-called blockchain, Ruja and Sebastian continued expanding their sales force and promoting OneCoin—using any means necessary.
In mid 2015, Ruja appeared on the cover of the influential business magazine Forbes, striking a power pose underneath the headline “A Cryptocurrency with Bulgarian Origin.
In reality, it wasn’t a cover at all. Ruja had paid thousands of euros to buy an ad in the Bulgarian edition of Forbes and designed it to look like a Forbes cover. Her team would rip out the front pages of the magazines to reveal her ad on the top, then distribute them as if it were Ruja on the cover.
Then, later that year, when the Economist held a convention in her native Bulgaria, she paid to be the keynote speaker. OneCoin then used footage of her speech to suggest that she was invited to give the speech.
Her personal brand continued to grow. In 2015, she won the Bulgarian Businesswoman of the Year Award. She wore clothes that were personally tailored for her in London. She hired a full-time makeup artist, and a videographer to follow her around and record her life. To the public, she was known simply as “Dr. Ruja.”
The money continued to roll in. In April 2015, three months after launching the blockchain, they passed 80 million euros in revenue. By November, they passed 1 billion. Yes, with a “B.”
Hundreds of thousands of people were spending their life savings on OneCoin, from all walks of life, and from all around the world. An oncologist from Montana. A single mother from Tennessee. A youth worker from the UK. An entire rural village in India. Uganda alone had over 50,000 investors, like Saturday David, a vitamin salesman who converted all of his money to OneCoin, then convinced his friends and relatives to do the same.
For Ruja and the other lucky few at the top of the pyramid, this obviously meant a huge windfall. By mid 2015, Ruja was a multimillionaire. Finally, she’d achieved the wealth and status she’d always desired.
But sometimes, you can have too much of a good thing.
Ruja converted much of her income into tangible things. A penthouse in Dubai, a townhouse and a restaurant in Sofia, a multi-million dollar jewelry collection, luxury cars, and a yacht. She even acquired $50 million worth of Bitcoin from a sheikh in the United Arab Emirates. Ruja also used her windfall to fund her business interests. She created an investment fund based in London called RavenR Capital, with another branch in Dubai. At one point, she was forced to rent an apartment in Singapore just to store stacks of paper money people had exchanged for OneCoin.
But there was still simply too much money.
By late 2015, less than a year after launching the blockchain, OneCoin had a sales force of 20,000 promoters in more than 100 countries around the world. Depending on their success, they held ranks named after precious gems: Emeralds, Rubies, Sapphires, and Crown Diamonds at the top.
OneCoin paid out commissions every Monday at 4pm GMT, which promoters called “Happy Monday.”
By late 2015, OneCoin was paying out millions of euros in commissions every Happy Monday. Imagine the logistical hurdles involved in moving that much money across that many countries.
On top of that, different countries have different regulations involving multi-level marketing companies. So, regulators were constantly flagging transactions and freezing OneCoin’s money.
Which meant Ruja needed to cultivate relationships with bankers who would help her clear regulatory hurdles.
It’s not clear when Ruja first met Gilbert Arimenta, but it was probably during her time at McKinsey & Company.
He was in his mid 50’s and lived in Florida, where he ran two investment firms. He also owned a stake in a bank in the Republic of Georgia called JSC Capital, among many other business ventures.
Ruja reached out to Gilbert and they made an arrangement. Ruja would send Gilbert money from the sale of OneCoins. Gilbert would then pay promoters their commissions in the form of prepaid Mastercards.
Only, the arrangement wasn’t entirely professional.
Gilbert was an alpha male type who drove luxury cars and wore statement watches and shirts designed by Salvatore Ferragamo.
You guessed it. Soon, Ruja and Gilbert began an affair.
Gilbert became more and more involved in Ruja’s burgeoning business empire. He introduced her to a corporate lawyer, who set up an investment firm based in the British Virgin Islands which Ruja would use to further launder her cash.
Gilbert also became more entwined in Ruja’s personal life. Ruja invited Gilbert to appear onstage at OneCoin events, often alongside her other paramour Sebastian Greenwood, as well as her husband Bjorn Strehl.
Did Ruja enjoy gathering her three male sexual partners in the same room, or was this just a matter of practical necessity? Did she simply compartmentalize her personal and professional lives? We don’t know.
By all accounts, 2015 and the first half of 2016 were banner years for OneCoin. By June 2016, OneCoin had raked in another billion in revenue. The value of a single OneCoin had risen from essentially zero to about seven and a half euros. She’d made many investors millionaires, and many more promoters rich, too.
But like we said, you can have too much of a good thing.
Ruja’s use of multi-level marketing to sell OneCoin worked so well that just 18 months after launching her blockchain, she’d already sold more than a billion of her 2.1 billion OneCoins–the vast majority of which, if you’re doing the math, hadn’t yet been mined.
OneCoins were running out. Which meant money would stop coming in. Ruja could just stop selling OneCoins and wait for the blockchain to catch up, but with just 10,000 OneCoins being released every 10 minutes, that would take almost a year.
So, in June 2016, Ruja made a decision.
OneCoin rented London’s Wembley Stadium, a 90,000 seat venue that hosts the home matches for England’s national soccer team.
Sfx: stadium ambiance.
On the evening of June 11th, Ruja was backstage at the stadium, pacing back and forth and rehearsing her speech. As usual, she was dressed for the occasion, this time in a red ball gown. She could hear the 3,000 excited OneCoin promoters and investors from all around the world stomping and cheering in the stands, waiting for her to appear.
As usual, Sebastian was onstage warming up the crowd.
I’m proud to be here today! All of you are extraordinary! And now, the reason we are all here…please give a warm welcome to our creator, our founder…Dr. Ruja!
Alicia Keyes’ “This Girl Is On Fire” blared on the loudspeakers. Ruja strode onto the stage.
18 months ago, I told a group of promoters that OneCoin will become a top three cryptocurrency in the world. I was wrong. Now, I think it’s time. Do or do not. We want to be the number one cryptocurrency in the world!
The crowd cheered.
Can we become the biggest cryptocurrency in the world with what we have now?
Yes! Shouted a man in the back row.
Ruja smiled, hiding the dread she’d been feeling for this moment.
No. We cannot. We will create a bigger coin than anyone. We will go up 120 billion coins.
The audience was stunned.
Like we told you, Ruja had once said that only 2.1 billion OneCoins would ever exist. Now, she was artificially increasing the amount of OneCoin by 100 times…which would decrease the value of everyone’s investment
The crowd began to murmur. But Ruja had planned for this.
For you, as existing members, people who supported us in phase one…we as a company will double the coins in your account!
The crowd went nuts…even though they were just receiving twice as much currency that was now 100 times less valuable than it was. A few days later, Ruja would make it official, launching her “new” blockchain in Bangkok.
Ruja had just committed two more cardinal sins of cryptocurrency, but she’d bought herself time. But soon, she would make a mistake that would bring it all crashing down.
Act Three
On September 29th, 2016, Bjørn Bjercke was at his office in suburban Oslo when he got a message in his LinkedIn account.
It was from a recruitment agent called Nigel Chinnock, and he had a job offer.
He spoke on the phone with Nigel a few days later.
It’s a billion dollar financial firm specializing in cryptocurrency, Nigel began. The salary is around 250,000 pounds a year, plus a new apartment in London and one in Sofia.
What’s the company called?
OneCoin.
Bjørn hadn’t heard of it. Which was strange, because he was plugged into the crypto scene. He started life as a computer hacker. When Satoshi Nakamoto mined the first Bitcoin in 2008, Bjørn was confident he could hack Nakamoto’s blockchain. When that proved impenetrable, Bjørn became a convert to the gospel of crypto. He thought it was a once-in-a-generation innovation. These days, he helped new crypto firms set up their blockchains.
So what will I have to do?
It’s a cryptocurrency that has a coin but they don’t have a blockchain. They need you to build them a blockchain.
What?!
Bjørn was stunned. How could a cryptocurrency exist without a blockchain? Building a blockchain for a cryptocurrency that was already on sale would be like digging a basement for a house that’s already been built.
This could only mean one thing: OneCoin was a scam.
Bjørn turned the job down, but the call stuck with him. Week later, he was horrified to learn that OneCoin’s founder Ruja Ignatova launched her “new” blockchain in Bangkok, which would accommodate OneCoin’s recent jump from 2.1 to 120 billion coins. Bjørn knew for a fact it didn’t exist, since he’d just been asked to build it—and such a blockchain was impossible to build anyway.
He wrote back to Nigel, saying OneCoin was a scam. Within hours, he was contacted by a Finn named Ari Widell, who represented a watchdog group called BehindMLM, which exposes multi-level marketing companies for fraudulent practices.
Ari convinced Bjørn to give an interview about his experience with OneCoin. It quickly spread through the anti-MLM community. But Bjørn still needed proof that OneCoin’s blockchain was fraudulent.
He opened several OneCoin wallets and began purchasing OneCoins. Then, he sat glued to OneCoin’s “blockchain display,” the feed that only gave a partial view of OneCoin’s blockchain.
Even a partial display should have shown Bjørn’s transactions. Bjørn made 200 transactions, and none of them ever showed up on the blockchain display.
This proved it: the blockchain display was entirely fake. It ran a script that generated fake transactions, while the real transactions were being kept secret.
Which meant OneCoins weren’t even being mined, which meant there were no OneCoins, which meant that hundreds of thousands of people around the world invested in a Ponzi scheme.
Soon, Bjørn made more disturbing discoveries. The brokerage site xcoinx, which was supposed to be independent and allow people to trade OneCoins for money, was actually controlled by Ruja. She also set the value of an individual OneCoin not based on supply and demand, but on whatever was most advantageous to her.
On top of that, OneCoin had been publishing monthly external audits from a supposedly independent company called S-Sytems, which was also controlled by Ruja.
By the time Bjørn made his discoveries in early 2017, over 9 billion nonexistent OneCoins had already been sold, for about 3 billion euros. By then, a single OneCoin was valued at about 7.95 euros. This meant that people believed they owned about 70 billion euros worth of OneCoin, which were in fact worthless.
Bjørn published his findings on YouTube. Around this time, the brokerage site xcoinx, which Ruja controlled, went down indefinitely for supposed “maintenance.” Now, nobody could exchange their OneCoins for actual money.
Things kept getting worse. We told you that financial institutions and governments around the world often froze OneCoin payments for suspicions of violating multi-level marketing and cryptocurrency regulations? Well, those financial institutions and governments hadn’t stopped paying attention to OneCoin.
At various times, financial institutions like the Bank of Mumbai or the Bank of Africa, and regulators like the UK’s Financial Conduct Authority labeled OneCoin as fraudulent. Ruja and her lawyers fought to get these accusations removed, but the damage was done.
The combined weight of watchdog groups, regulators, and their own shady business practices meant that in early 2017, OneCoin lost that momentum so essential to multi-level marketing. Promoters and executives fled OneCoin in droves.
Ruja knew it was time to get out.
She considered making OneCoin a publicly traded company. This way, she could sell shares in OneCoin, and then when their value inevitably tanked, she could blame the market and walk away. She also considered converting OneCoin into a traditional multi-level marketing company. Neither of these plans would come to fruition.
Ruja was becoming paranoid. Like Bitcoin, not all of OneCoin’s customers were law-abiding citizens. Some were violent criminals, and they might not be happy that their investment was now worthless. She hired extra bodyguards and bought a bulletproof town car.
Her personal life was changing, too. In late 2016, she learned she was pregnant at 36 with a daughter. She’d never wanted to be a parent, but now that she was about to be, her priorities changed.
Meanwhile her love life was in shambles. She was still married to her husband Bjorn Strehl, but she’d ended things with Sebastian when she caught him having an affair with one of her assistants. She’d fired the assistant and replaced him with her brother Konstantin. Konstantin had always been her friend and confidante, but he was becoming a bigger and bigger part of the company.
Then there was Gilbert Arimenta, her fiftysomething Florida financier and other paramour. Along with her husband Bjorn, she invited both Gilbert and Sebastian to her 36th birthday party at her beach house in the Bulgarian seaside town of Sozopol, where she’d flown in her favorite American pop star Bebe Rexha.
Around this time, Ruja surprised herself by falling in love with Gilbert. She wanted to divorce Bjorn, and for Gilbert to leave his wife, so that they could marry and raise her daughter. Gilbert was onboard—or so he said.
The months dragged on. The stress and paranoia from OneCoin were getting to Ruja, and she was becoming impatient.
So, she had her head of security handle it. An ex-spy from Luxembourg. The head of security hired a local operative in Florida to drill a hole in the floor beneath Gilbert’s apartment and install listening devices.
When Ruja got the recordings, she heard Gilbert telling his wife he’d never leave her. So, she called him up.
Gilbert, what the fuck is wrong with you really? I never thought you were like a spineless asshole, are you?
Well, the big issue right now is—
No need! No need! I know people can be weak, but I don’t deserve this, and your wife doesn’t either. There is such a thing as personal integrity. Google it.
But the recordings held an even more disturbing revelation: Gilbert was in trouble with the FBI. He’d made some dodgy investments in the UK, and now he was being investigated for extortion.
Ruja knew this wasn’t good. Thanks to their financial arrangement, Ruja’s money was hopelessly tangled with Gilbert’s business interests. Ruja knew that if just one dollar that she obtained illegally had passed through the United States, the FBI would have a case against her, too. And the FBI had a long reach.
Ruja’s company was bleeding employees, investors, and promoters. Now the law was probably after her. And the remaining OneCoin believers were demanding answers. She promised to explain everything at an upcoming OneCoin conference in Lisbon.
But Ruja needed answers, too. Things were over between her and Gilbert romantically, but she needed to know how much trouble she was in.
She agreed to meet Gilbert at Paris Fashion Week 2017. Gilbert sent his teenage son instead. Ruja learned that weeks earlier, Gilbert was charged with three counts of extortion and was under home confinement. Since he hadn’t even tipped her off, she assumed the worst: Gilbert was cooperating with the FBI. Which he was.
Ruja fled to Sofia and holed up in her mansion, skipping the Lisbon conference entirely.
Weeks later, Ruja got a tip. The United States had indeed been investigating Ruja and indicted her. A Mutual Legal Assistance Request was submitted to the Bulgarian government, and Bulgaria was planning to comply. German prosecutors were also planning to arrest her.
Where did this tip come from? Likely in the Bulgarian government. As we said, she spent years cultivating relationships with Bulgaria’s elites, including law enforcement. It’s never been proven that one of them tipped her off, but since Bulgaria is regularly ranked among the most corrupt countries in Europe, it’s not far fetched.
However it happened, it was time to move.
Ruja asked Konstantin to book her a flight from Sofia to Vienna, then appeared to change her mind and asked him to book another from Sofia to Athens. When he asked if she wanted to cancel the first flight, she shouted,
No, I need both!
The next morning, Ruja got up at 4 a.m. and flew to Athens with her head of security. That evening, the head of security returned to Sofia alone.
What happened to Ruja, Konstantin asked.
At Athens airport, she was met by Russian-speaking men. Then she carried on traveling with them.
The head of security had no idea who these Russian men were or where they’d gone.
All they knew was that the Crypto Queen disappeared.
Act Four
One night, after another long exhausting day at OneCoin’s Sofia headquarters, Konstantin left the office and headed for his car when he felt a pressure at the back of his head. He recognized it as a gun.
His assailants shoved him into a nearby van. One of them grabbed his finger.
SFX: bone snapping
Konstantin stifled a scream.
You’d better find your sister, one of his assailants said. If you go to the police, we will return for a body part. If she ran off with our money and you can’t find her, we will come back and kill you.
They kicked Konstantin out of the van and into the night.
It was late 2017, and Ruja was god knows where with god knows who. This was just the latest example of the daily harassment Konstantin was under. He’d started his OneCoin career as Ruja’s assistant. But now, the tattooed gym rat who fancied himself an MMA fighter was a senior member of staff, even though he still had virtually zero understanding of cryptocurrency.
He was also one of the last people to have seen Ruja alive. On a daily basis, angry OneCoin employees, promoters, and investors accosted him, demanding to know where Ruja was. He told them she was on sabbatical and planned to return by Christmas, but this was a lie. He had no idea where his sister was, or if she was still alive.
Gradually, Konstantin learned the truth from OneCoin’s remaining employees: they were selling nothing more than thin air.
Even so, Konstantin spent most of 2018 traveling the world, trying to drum up OneCoin sales—after it had been widely discredited as fraudulent. He traveled to 40 countries, most of them in Latin America and Africa, where news that OneCoin was bogus hadn’t been widely publicized.
Like we saw up top, he was arrested in March 2019 and sentenced to five years in prison for his role in OneCoin.
Konstantin wasn’t privy to the emails between Ruja and her one time business partner, co-conspirator, and lover Sebastian Greenwood. If he had, he would have known that one particular email Ruja wrote years earlier, which read:
Exit strategy: disappear and let someone else take the blame.
Had indeed come true.
As for Ruja Ignatova, although the FBI was unable to continue its prosecution against her, she was placed on the Top Ten Most Wanted Fugitives List in 2022, the first person to land on it for crypto-related crimes.
It’s impossible to calculate how much OneCoin investments cost investors because Ruja didn’t keep meticulous records.
Nearly one million people in 175 countries invested in OneCoin. The company paid about 1.4 billion euros out as sales commissions, but most went to the top 5%, and most of that went to Diamond-level and above, the top .5 percent. Only about 50,000 people ever profited from OneCoin.
Once you subtract commissions, OneCoin made its owners somewhere between 2.6 and 10 billion dollars. That makes it the second-largest con of all time, behind only Bernie Madoff’s Ponzi scheme, which stole at least 36 billion dollars from investors.
But it’s impossible to calculate the losses caused by OneCoin’s failure to increase in value and allow investors to profit. Based on what Ruja had promised investors about how much OneCoin would increase in value at her many promotional events, overall investors could expect OneCoin to be worth about 100 billion euros.
That’s 100 billion euros in expected wealth that vanished, just like Ruja did. That would make Ruja the most successful con artist to escape punishment–assuming she’s still alive.
Ruja’s whereabouts remain unknown. Is she living in seclusion in a Dubai penthouse? Was she chopped up and thrown in the Ionian Sea by a cocaine baron? Or is she currently tooling around the Mediterranean in a luxury yacht.
True, most of Ruja’s OneCoin funds remain frozen, and her physical assets remained out of reach. But there was one thing she could rely on.
Remember when we said she traded a Dubai sheikh for $50 million worth of Bitcoin?
When that deal went down, a single Bitcoin was worth about 230 euros. When Ruja went into hiding, one Bitcoin was worth nearly 6,000 euros.
This would make Ruja billionaire—even if she never kept a cent from her OneCoin funds. Definitely enough to fund a Mediterranean yacht lifestyle.
If that’s indeed what happened, then crypto saved the Crypto Queen.
CREDITS
Thanks for listening to Modem Mischief. Don’t forget to hit the subscribe or follow button in your favorite podcast app so you don’t miss an episode. This show is an independent production and is wholly supported by you, our listeners and the best way to support the show is to share it. And another way to support us is on Patreon or as a paid subscription on Apple Podcasts. For as little as $5 a month you’ll receive an ad-free version of the show plus bonus episodes exclusive to subscribers. Modem Mischief is brought to you by Mad Dragon Productions and is created, produced and hosted by me: Keith Korneluk. This episode is written and researched by Jim Rowley. Edited, mixed and mastered by Greg Bernhard aka Editing and Mixing Queen. The theme song “You Are Digital” is composed by Computerbandit. Sources for this episode are available on our website at modemmischief.com. And don’t forget to follow us on social media at @modemmischief. Thanks for listening!