Business & Finance

Defaulted Crypto Startup Sued $130k by the Investor

One former investor has sued the notorious crypto ponzi scheme OneCoin, over her losses in a New York court. The lawsuit which was filed on Tuesday complained that the accuser Christine Grablis lost more than $130,000 in the scheme.

The lawsuit filed by the law firm Silver Miller on behalf of Grablis, seeks reparations from the company behind the fraud, she has sued the company for a full refund of the amount plus damages. The firm handling the case is also looking at other investors who have lost money through the scheme, to join in to make it a class action lawsuit. The document submitted by the accuser’s states that the Federal Exchange Commission’s registration process requires companies to provide information to their investors before they invest; however, OneCoin Ltd did not inform the investors about any information that might have swayed them away from the investment. The document also quotes the FBI‘s Assistant Director in charge of the case, said:

“OneCoin was a cryptocurrency existing only in the minds of its creators and their co-conspirators. Unlike authentic cryptocurrencies, which maintain records of their investors’ transaction history, OneCoin had no real value. It offered investors no method of tracing their money, and it could not be used to purchase anything. The only ones who stood to benefit from its existence were its founders and co-conspirators”.

READ ALSO: Crypto Startup Founders Luxury Cars and Property Seized

OneCoin was started by a Bulgarian Woman named Ruja Ignatova, an Oxford graduate, and Sebastian Greenwood, a multi-level marketing specialist who had worked in numerous companies which then turned out to be Ponzi Schemes. After its launch in 2014, the company generated more than 3.4 billion euros in revenue until 2016. One way the company generated revenue was multi-level marketing, OneCoin Ltd used to hire commissioned members who used to sell fraudulent cryptocurrency packages to novice investors. The company claimed that the company itself mined OneCoin; however, it was reported by law enforcement that the company programmed the value of the coin to increase from 0.50 euro to 29.95 euros. US authorities have estimated that the company defrauded investors off of almost 4 billion dollars.

READ ALSO: Crypto Exchange Denies Exit Rumors, Promises Reimbursements

Crypto Scams and its effect on investor confidence

Crypto Ponzi schemes have been plaguing the crypto landscape for a long time now. Investors have been defrauded of billions of dollars by these fraudulent companies. Just like OneCoin, Plexcoin was also offering insane returns to its investors. The company promised more than 1300% return on their investment and raised more than $15 million in its ICO. However, it was soon revealed that the company was a return on investment Ponzi scheme and SEC froze the company’s accounts and ordered it to halt its operations.

READ ALSO: Crypto Startup Wrongfully Portrayed as Scam by the Media

Ponzi schemes and the volatility of the digital assets have always been the main factors that have affected institutional investment in the crypto space. The reason why cryptos have not penetrated to the mainstream is that people don’t trust cryptocurrencies due to the curtain of uncertainty around them and the fact that most cryptocurrencies turn out to be a scam. In a study conducted by an ICO consulting company Statis Group, almost 80% of ICOs done in 2017 turned out to be scam afterwards. In a similar report, it was also revealed that up till 2018, almost 1000 cryptocurrencies had lost all of their value.

READ ALSO: Crypto Startups Will Go Against SEC if Enough Regulatory Clarity Isn’t Provided


Shahzaib Zafar

Electrical Engineer, Crypto enthusiast, a tech nerd and a developer with a keen interest in blockchain, writes daily articles about bitcoin and cryptocurrencies for blockpublisher.

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