In a recent report released by The Block, they show hat OneCoin indictment includes securities fraud charges.
According to this report released by Nelson Rosario and Stephen Palley, they inform that OneCoin organizer, Ignatov and Ignatova, have been charged with wire fraud, conspiracy to commit money laundering and also securities fraud.
OneCoin Indictment Includes Securities Fraud Charges
It has been very difficult to understand how the U.S. Department of Justice (DOJ) would deal with fraudulent Initial Coin Offerings (ICOs) and crypto-related projects. There are yet no clear rules regarding ICOs and other activities in the space, even when the U.S. Securities and Exchange Commission (SEC) considers ICOs as unregistered securities.
Indeed, as The Block explains, prosecutions related to these schemes have been “thin on the ground.” However, they mention that there is an exception, U.S. v Homero Joshua Garza, that has been conducting a mining Ponzi scheme related to Bitcoin. In general, DOJ has been quiet during the bull market experienced by virtual currencies in 2017.
Moreover, where it has been involved, the DOJ had very limited influence. Things may have changed with the indictments related to OneCoin.
OneCoin started around 2014 after an altcoin boom that saw other digital currencies enter the market and grow. Nonetheless, there were several sceptics due to the lack of blockchain and an MLM compensation scheme. Apparently, the founder is a Bulgarian citizen, Ruja Ignatova.
According to the DOJ, this particular scheme has been massive. Indeed, it involved $3 billion. As per the analysts at The Block, this indictment could provide valuable information about what we can expect in the future from prosecutors and Initial Coin Offerings.
Back in September, the scheme’s attorney was indicted with conspiracy to commit money laundering. The scheme organizers, Ignatova and also Ignatov, include the count of conspiracy to commit fraud. Thus, the DOJ thinks that it is able to convince a judge that an ICO token is a security by applying the Howey test.
The report released by The Block reads as follows:
“If the indictment’s allegations are proven to be true, it would mean that OneCoin is among one of the more outrageous, flagrant, and long-running alleged scams in the cryptocurrency business, and only now have the wheels of justice ground their way to an indictment.”
There have been several scams and frauds in the cryptocurrency space during the last years. 2017 and the beginning of 2018 have been moments in which the number of fraudsters increased due to the bull market in which the crypto space was involved.
Now, the DOJ seems to be clarifying its stance regarding ICOs and how to deal with them.