As the criminal proceedings against OneCoin, the digital currency pyramid scheme, start to make serious progress, the class action suit against it are fumbling at a crucial time. U.S. prosecutors have indicted a key figure in the scam, while a judge is threatening to throw out a civil suit entirely.
Karl Sebastien Greenwood, who was apprehended in 2018, has been indicted on charges of wire fraud, securities fraud and money laundering charges. The indictments came in February of that year, but have just been unsealed.
The indictment specifically accuses Greenwood of conspiring to defraud would-be investors into buying OneCoin packages, which would allow them profit off of OneCoins mined. According to the court documents, the scam brought in “over $1 billion of investors funds” in the four years before the indictments were made.
Prosecutors described Greenwood’s alleged crimes:
“…GREENWOOD, and others working on his behalf, made and caused to be made false statements and misrepresentations soliciting individuals throughout the world, including in the Southern District of New York, to invest in ‘OneCoin’ a purported cryptocurrency, and instructed individuals to transmit investment funds to OneCoin depository accounts in order to purchase OneCoin packages, thereby causing individuals to send interstate and international wires representing their OneCoin investments, and resulting in the receipt of over $1 billion of investor funds into OneCoin[-]related bank accounts.”
This makes another significant step in bringing down the ringleaders of the OneCoin Pyramid scheme. Konstantin Igantov was arrested and indicted in March 2018, while his sister, Ruja, is still on the run.
“As alleged, these defendants created a multibillion-dollar ‘cryptocurrency’ company based completely on lies and deceit. They promised big returns and minimal risk, but, as alleged, this business was a pyramid scheme based on smoke and mirrors more than zeroes and ones,” Manhattan U.S. Attorney Geoffrey S. Berman said.
Konstantin Ignatova, who has already pleaded guilty, was set to be sentenced on April 7 for his crimes. At the request of the government, possibly due to COVID-19, this has been postponed to July 8, 2020.
Meanwhile, U.S. District Judge Valerie Caproni wonders if plaintiffs in a class action suit against OneCoin are just wasting her time. She has scheduled an April 16 hearing for the representation of the plaintiffs’, wanting to know why they keep missing court deadlines.
Law firms Levi & Korinsky LLP and Silver Miller, who represent the plaintiffs, will have to explain why they missed an important April 10 deadline, and a previous deadline to submit monthly reports. “Lead plaintiff is sternly warned that failing to comply with the court’s orders going forward could result in sanctions,” Judge Caproni wrote. “It is hereby ordered that Lead Plaintiff must show cause no later than April 16, 2020, why this case should not be dismissed with failure to prosecute.”
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