Some people have made a lot of money in the tech world. Some have done it by creating companies, others by investing in them. But there are others who wish that they had invested in successful companies early on and made a lot of money but didn’t and now feel that they missed out. These people who are on the lookout for the next big thing so that they can get is early and cash in too. Such people are easy prey for con artists who know that the sales pitch of ‘buy now before it is too late’ can drive people to rash decisions and invest in something they may know little about for fear of missing out again.
We have seen this scenario play out so many times before and blog reader Jason Wessel sent me a link to this extraordinary story about someone who managed to scam people out of millions of dollars by promising them great rewards with a new cryptocurrency called OneCoin that she claimed would put Bitcoin out of business. The scam was based on the multi-level marketing scheme used by companies like Amway whereby people are recruited to sell both a product and also recruit new people to sell the product. Part of the sales proceeds of the new recruits goes to the person who recruited them, all the way up the chain. This is a version of a pyramid scheme and, like all such schemes, the few people who get in early make the most money while those lower down the chain can lose whatever they invest.
What astonishes me is that so many people were convinced by a Bulgarian woman named Dr Ruja Ignatova to invest in a non-existent product about which they knew nothing except that it had catchy buzzwords like cryptocurrency and blockchain and was marketed as superior to Bitcoin. She has now disappeared along with millions of dollars of investor money.
In early June 2016 a 36-year-old businesswoman called Dr Ruja Ignatova walked on stage at Wembley Arena in front of thousands of adoring fans. She was dressed, as usual, in an expensive ballgown, wearing long diamond earrings and bright red lipstick.
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 – and the rate of investment could have increased after the Wembley extravaganza. Between August 2014 and March 2017 more than €4bn was invested in dozens of countries. From Pakistan to Brazil, from Hong Kong to Norway, from Canada to Yemen… even Palestine.
Dr Ruja was still travelling the world to sell her vision – hopping from Macau to Dubai to Singapore, filling out arenas, pulling in new investors. OneCoin was still growing fast, and Dr Ruja was starting to spend her new fortune: buying multi-million-dollar properties in the Bulgarian capital, Sofia, and the Black Sea resort of Sozopol. In her downtime she would throw parties on her luxurious yacht The Davina. At one, in July 2017, the American pop star Bebe Rexha performed a private set.
And then suddenly, in October 2017, she disappeared and has not been seen since.
One appeal of a crytpocurrency is that it promises a global currency free from control by any one government. Interestingly, in his book Moneyland that I reviewed earlier, author Oliver Bullough says that at the post-war meeting held in Bretton Woods to create a stable world economic order following the disruption of World War II, economist John Maynard Keynes proposed the creation of a new global currency independent of any nation that would provide for more stable currency markets. But the US shot that plan down, seeking to make the US dollar the global currency since it gave them domination over the world’s financial system. The rise of cryptocurrencies is partly a revolt against that domination.