Cryptoqueen: How this woman scammed the world, then vanished

Cryptoqueen: How this woman scammed the world, then vanished

"OneCoin, Dr Ruja told the Wembley audience, was the "Bitcoin Killer". "In two years, nobody will speak about Bitcoin any more!" she shouted.

All over the world, people were already investing their savings into OneCoin, hoping to be part of this new revolution. Documents leaked to the BBC show that British people spent almost €30m on OneCoin in the first six months of 2016, €2m of it in a single week...

She started asking the leaders of her OneCoin group if there was a blockchain. At first she was told it was something she didn't need to know, but when she persisted she finally got the truth...

"They don't want to disclose that kind of information, just in case something goes wrong where the blockchain is being held. And plus, as an application, it doesn't need a server behind it. So it's our blockchain technology, a SQL server with a database"...

A standard SQL server database was no basis for a genuine cryptocurrency. The manager of the database could go in and change it at will...

Despite the successful facade, trouble was brewing...

Dr Ruja - who was famously punctual - didn't show up... Some feared she'd been killed or kidnapped by the banks, who - they'd been told - had most to fear from the cryptocurrency revolution.  In fact, she had gone underground...

Dr Ruja's genius was to recognise that established MLM sellers with huge downlines were the perfect vehicle to market her fake coin - a plan the FBI says she privately referred to as "the bitch of Wall Street, meets MLM". This was the secret of OneCoin's success. It wasn't just a fake cryptocurrency, it was an old-fashioned pyramid scheme, with the fake coin as its "product"...

MLM networks - where people often recruit others who are close to them - creates a blurred sense of responsibility... if sellers have invested their own money, they are victims too...

When you're dealing with a scam worth billions of euros, it's not unusual for shadowy groups to get involved. Several of the people Georgia and I interviewed spoke darkly about mysterious people and connections they didn't want to name.

"When you talk about the amount of money that's been put into OneCoin of course there's people out there who are pissed off and would do anything to shut anyone like me up," says Bjorn Bjercke, the blockchain expert who discovered there was no blockchain, and started talking about it publicly.

He tells me he's received death threats as a result of speaking out. "If I knew what I would have to go through, I would have never blown the whistle. I would have just turned my back and walked away"...

When I ask him who might be behind the threats, he won't elaborate. "I can't discuss that. It starts to get very very very scary, very very very fast"... it was never supposed to be a billion-dollar scam. She tried to close it down, he says, but the dark forces wouldn't let her...

Why have so many people continued to believe in OneCoin, despite all the evidence?

Investors often told us that what drew them in initially was the fear that they would miss out on the next big thing... Many were struck by the personality and persuasiveness of the "visionary" Dr Ruja. Investors might not have understood the technology, but they could see her talking to huge audiences, or at the Economist conference. They were shown photographs of her numerous degrees, and copies of Forbes magazine with her portrait on the front cover...

But it seems it's not just the promise of riches that keeps people believing. After Jen McAdam invested into OneCoin she was constantly told she was part of the OneCoin "family"... McAdam's leader prepared her carefully for conversations with OneCoin sceptics. "You're told not to believe anything from the 'outside world'," she recalls. "That's what they call it. 'Haters' - Bitcoiners are 'haters'. Even Google - 'Don't listen to Google!'" Any criticism or awkward questions were actively discouraged. "If you have any negativity you should not be in this group," she was told.

Prof Eileen Barker of the London School of Economics, who has spent years studying groups like the Moonies and Scientologists, says there are similarities between OneCoin and messianic millennium cults, where people believe they are part of something big that is going to change the world - and no matter what the evidence, once they've signed up, it's very hard for them to admit they are wrong.

"When prophecy fails they believe more strongly," she says. "Particularly if you have invested something, not only money, but belief, reputation, intelligence. You think, 'Wait a bit longer.'"

Money might push people to invest in the first place, but the sense of belonging, of doing something, of achieving something, is why they stay, Barker says. "And in that sense it's cultic."

In an ideal world, regulators would take action to protect consumers from scams like OneCoin. But the authorities all over the world have been slow to react, partly because the whole area of cryptocurrencies is relatively new."


I wonder how libertarians blame this cryptocurrency scam on government regulation

There're also parallels with how China shills dismiss informed opinions on China