Picture the scene. It’s London’s Wembley Arena and the date is June 11, 2016. Dr Ruja Ignatova takes to the stage against a backdrop of the Alicia Keys’ hit song Girl On Fire. Flames shoot high into the air and hundreds of screaming fans get their mobile phones out to welcome their hero.

With her flowing silk ballgown, trademark bright red lipstick and expensive diamond drop earrings, she looks every inch the star – but there’s a difference. This isn’t a pop concert but a financial sales presentation. Dr Ruja isn’t a superstar but the ‘founder and visionary’ of a pseudo ‘cryptocurrency’ called OneCoin that, at the time, was taking the world by storm.

Less than 18 months later the self-styled ‘cryptocurrency Queen’ failed to show for a OneCoin event in Portugal in October 2017 and things began to unravel. She hasn’t been seen since – just like much of the billions that investors all over the world have parted with.

And here’s the thing. OneCoin was never a legitimate cryptocurrency as most people would know it. It was never underpinned by a functioning blockchain platform that would allow people to buy and sell coins on an exchange.

What’s clear is the old saying - ‘if it’s too good to be true, it probably is’ – was trampled over by investors around the world who didn’t want to miss out on the next big thing. Instead they believed Dr Ruja’s claims that OneCoin would eventually be traded for real money and accepted in shops and restaurants as a form of payment.

It never happened. Although investors saw the notional value of their investment soar on their computer screen it didn’t reflect any true value because it was just a price made up in Bulgaria, where OneCoin was headquartered.

Today Dr Ruja is still missing and wanted by the FBI on allegations of wire fraud, securities fraud and money laundering. The FBI described OneCoin as a ‘pyramid scheme based on smoke and mirrors more than zeroes and ones’.

According to the BBC her brother Konstantin has admitted his role in the fraud and could be jailed for up to 90 years while US lawyer Mark Scott has been found guilty for his part in the Ponzi scheme type fraud and is awaiting sentence.

The rise and fall of OneCoin is the subject to a brilliant BBC podcast called ‘The Missing Cryptoqueen’, with Jamie Bartlett and producer Georgia Catt, and begs two questions: 1. How could it happen? and; 2. Could it happen again?

Gavin Brown, who is a senior lecturer at Manchester Metropolitan University and acknowledged as an expert on all things crypto, answers the second question first. “Yes it could happen again and it’s probably happening as we speak,” he told BusinessCloud.

“Because greed exceeds their level of scrutiny people don’t want to miss out. The problem with the cryptocurrency space is it’s not regulated so these things can happen.”

Before we try and answer the first question we must first understand the process of how cryptocurrencies are normally launched.

According to Brown the first thing you’d do is create a white paper – similar to a business plan – explaining how the cryptocurrency would work. You’d then launch a second white paper in code outlining how many coins there would be and how they would be created. For example Bitcoin stated at the outset there would never be more than 21 million in existence. There are currently 18 million in circulation. This helps protect the value.

Once the white papers are produced you’d then create a team of developers, coders, PRs etc and engage with exchanges that allow customers to trade cryptocurrencies. Once you meet certain criteria, like liquidity, you can launch your cryptocurrency and increase the supply of coins as demand grows.

Onecoin app

Just like Bitcoin, the early adopters of a successful cryptocurrency make the most money which is why investors were so willing to pour money into OneCoin without a second thought.

“OneCoin was well organised,” explained Brown. “The platform was well put together. They had an eligmatic speaker. They launched at a time just before the ICO (Initial Coin Offering) craze.

“However for a cryptocurrency to work you have to be underpinned by blockchain. For instance anyone can see Bitcoin transactions as they happen. You didn’t have that with OneCoin. You could go to the website, see how much they said your investment was worth but they were managing it all. I wouldn’t have invested in OneCoin because I could not see the user case. What does it add to the economy?”

Twelve months ago journalist Jamie Bartlett received a phone call from a producer asking if he’d ever heard of OneCoin. “I thought it was bonkers,” Bartlett told BusinessCloud. “Although I’d studied a lot of cryptocurrencies I hadn’t heard of it. OneCoin was not targeting typical crypto investors, it was targeting ordinary people who didn’t understand tech.”

It was a phone call that sparked a nine-month investigation that took him all over the world, from OneCoin’s base in Bulgaria to Germany where Dr Ruja had lived, Holland, Romania, Scotland and even Uganda, where poor farming families had invested in it.

The first OneCoin transactions can be traced back to the end of 2014 although things started in earnest in 2015 and took off from there. The central figure throughout is undoubtedly Dr Ruja Ignatova.

Onecoin office

Bartlett never met Dr Ruja, who would now be 39 if she’s still alive, but he’s seen plenty of the cult-like status that surrounded her.

“She’s charismatic as anyone who leads a large organisation tends to be,” he said. “She’s very intelligent. Her secondary teacher said she could recite German poetry within a few months of learning the language.”

Bartlett said she had to be incredibly ‘gutsy’ to stand on a stage and speak with real conviction about something that was effectively a scam (something OneCoin have consistently denied).

Investors might not have fully understood the technology but believed her when she said the future belonged to cryptocurrencies.

What’s clear is OneCoin took advantage of the intransigence authorities all over the world seemed to display to the threat, partly because cryptocurrencies are relatively new. 

“When it comes to cryptocurrencies they’re not regulated by anyone,” said Bartlett. “It’s not clear who is responsible for them.”

The UK's Financial Conduct Authority (FCA), which is responsible for regulating financial markets in the UK, issued a warning on its website in September 2016 but subsequently deleted it.

But such warnings didn’t stop the money pouring in from all over the world. Dr Ruja’s supporters dismissed the sceptics as ‘haters’.

The term ‘haters’ came up a lot during Bartlett’s investigation. “Every allegation we made we would put to OneCoin,” he said. “It was multiple times. They said our report would be biased because we were talking to haters.”

According to The Missing Cryptoqueen podcast, Norwegian Bjorn Bjercke was offered a salary of £250,000 in 2016 to build OneCoin’s blockchain technology but turned it down largely because this should have happened much earlier. 

What propelled OneCoin around the world was the involvement of multi-level marketing (MLM) which was co-ordinated by its marketing affiliate network.  MLM is controversial because usually only a small number of people make all the money.

“MLM is the key to understanding how it works,” Bartlett told BusinessCloud. “In some senses it would be better to call it a MLM scam rather than a crypto scam. It’s a classic pyramid scam that uses a fake cryptocurrency as the product with Dr Ruja as the face.”

 Bartlett believes Dr Ruja is still alive but admits there’s a chance she’s dead.  It’s been rumoured that OneCoin was linked to organised crime syndicates in Eastern Europe but Bartlett prefers not to speculate.  

Although it’s estimated that €4bn was invested in OneCoin some people think the figure could be as high as €15bn with victims coming from as far away as China and Uganda.

By the autumn of 2017 Dr Ruja seemed unstoppable but then she disappeared and hasn’t been seen since.

Earlier this week OneCoin’s website was taken offline but Bartlett said that’s not the end of the story. “OneCoin still exists,” he said.  “The wheels might be coming off but they exist.”

Rather depressingly Bartlett predicts there could be another OneCoin scandal. “It’s the strangest thing I’ve ever worked on. It’s a whole world I never knew existed. It opens up your eyes about how easy it is to deceive people by hype.”

Chris Maguire is the Executive Editor of BusinessCloud. He can be contacted at chris.maguire@businesscloud or on Twitter @editor_maguire

  • The Missing Cryptoqueen is available on BBC Sounds