Scammers do not operate in a vacuum. They analyze social trends and spot opportunities to look credible. Since 2010, the world’s information output has grown exponentially, and everyone is now bombarded with endless data, graphs, claims and counterclaims. Some of it is from established experts but much of it is not. Working out who to trust is tiring and confusing, especially in novel industries like cryptocurrency where there are no established authorities or agreed-upon qualifications. Ruja took advantage of the uncertainty.1
In the summer of 2015, around the time OneCoin released its €12,500 Premium Trader package, and the company topped €1 billion in revenue, Ruja—dressed all in black and wearing red lipstick—appeared on the cover of Forbes magazine under the headline “A Cryptocurrency with Bulgarian Origin.” Over a two-page spread, Ruja talked about the future of finance and the coming crypto revolution. Forbes is one of the world’s most famous business magazines and for decades aspiring entrepreneurs have dreamt of seeing their face gazing out from its cover in newsstands in New York, London and Tokyo. Warren Buffett, Bill Gates, Elon Musk have all made it. When the July 2015 edition was published, OneCoin’s social media accounts lit up: “In her interview for the prestigious magazine Forbes,” read one post, “our founder Dr. Ruja introduces OneCoin.”
The impact was immediate. Promoters were sent copies to distribute at events. Rubies and Sapphires shared the article with uncertain relatives. In Uganda, wannabe investors were shown photos of the famous cover in seminars and workshops. For anyone confused by the tech (which was nearly everyone), it was a convenient substitute for careful analysis: who needed to understand the intricacies of the blockchain or the mining process when the boss was a Forbes cover star?
But Ruja wasn’t the Forbes cover star at all. Via Forbes’ specialized PR firm “Brand Voice,” she’d purchased three pages inside the Bulgarian edition of the magazine and designed an advert that looked indistinguishable from the journalistic content, including a mock-up cover page. (The real cover that month was in fact pop icon Katy Perry, under the strapline “Pop’s Top Export.”) Far from being a Forbes front cover star to rival Zuckerberg or Elon, Ruja had paid a few thousand Euros for a simulation. The only way to figure this out at all was to be fluent in Bulgarian and spot the small words “Brand Voice from OneCoin” next to Ruja’s power pose, which indicated it was sponsored content. The vast majority of OneCoin investors could not place Bulgaria on a map, much less speak the language. Sofia HQ purchased hundreds of copies, ripped off the real front cover, and started sending the phoney Forbes around the world.
Ruja repeated the clever trick a few months later with an even more esteemed business publication, The Economist. In November 2015, she was the keynote speaker at a large conference hosted by the magazine in central Sofia, which was attended by local bigwigs, including the Bulgarian president Rosen Plevneliev. The Economist in London had subcontracted its conferences in the region to a local events company called Hazlis & Rivas who sometimes allowed sponsors to speak at conferences. As the delegates filed into the luxurious Hotel Balkans to spend two days discussing economic cooperation and development in Southeast Europe, they were greeted with a large poster displaying the sponsors: Dell, CNN, Visa. Top of list and the only “Platinum” sponsor was OneCoin. The amount she paid has never been disclosed, but she was given a 15-minute speaker slot, during which she wowed the 100 or so participants with her vision of the future of money. “Our company… reached market capitalisation of one billion euros,” she told the audience. “We take a very active approach of shaping the future of money.”2 “I was speechless,” recalled Igor Alberts, who was in the audience. “She knocked all the other people off.” Ruja ignored Hazlis & Rivas” stipulation that she not use any logos or footage from the event: within days, the OneCoin PR team had edited and released a promotional video of the entire speech. “Would The Economist invite a Ponzi scammer to speak at one of their events!?” promoters would ask. Just as with Forbes three months earlier, no one mentioned that Ruja had paid for her turn. (Hazlis & Rivas has since stopped allowing sponsors to speak at events.)
It’s impossible to know how many people were persuaded by this technique—but judging by the degree to which promoters pushed it onto investors, it was highly effective. Jen McAdam, a Scottish investor who later spent her father’s inheritance of around €12,000 on OneCoin, said that it was The Economist speech that persuaded her that Ruja could be trusted.
But the people who most helped Ruja make OneCoin appear credible came from a more trusted profession than journalism. From the outset, Ruja understood the value of having lawyers on tap, and even before the first OneCoin package was sold in summer 2014, she appointed her German lawyer Martin Breidenbach as owner of OneCoin Ltd in Dubai. Toward the end of 2014, Martin’s firm Breidenbach Rechtsanwälte published a legal opinion about OneCoin, stating it was “a legitimate product limited to 2.1 billion coins.”3 Lawyers are assumed to be trustworthy—which is why their letters and opinions are so valuable. Martin’s stamp of approval was circulated widely, appearing in promotional PowerPoints and online seminars.4 (Martin Breidenbach was approached for comment about his involvement in OneCoin but had not replied by time of publication.)
Ruja loved lawyers (she was married to one, after all), and by 2017 had a network of at least six law firms working across five countries. Her go-to law firm in the UK was Locke Lord, who she started using in early 2016. Mark Scott’s work was done without the firm’s knowledge (though he too denies any wrongdoing, and claims that he was misled by Ruja), but Locke Lord’s payments specialist Robert Courtneidge, one of the world’s leading experts, advised Ruja for three days on how OneCoin should expand, seemingly unaware it was a giant Ponzi. (“At the time I was reviewing [OneCoin], there were many new cryptocurrencies coming into the market,” Robert said later. “I was told the intention was to create a real competitor to Bitcoin.”) A Locke Lord partner, James Channo, administered the purchase of her multi-million pound London penthouse.
One reason they didn’t figure out that OneCoin was a Ponzi scheme was the way Ruja used different law firms to advise on different elements of her business. When she wanted advice about whether OneCoin’s MLM activities might breach the UK’s anti-pyramid trading laws, she didn’t ask Locke Lord. Instead she instructed Hogan Lovells, another respected firm based in London, who spent months “on-boarding” (a legal term for various due diligence checks) the company and then several more months examining the business model in detail. Their team even visited the Sofia HQ, on a “fact-finding” trip. According to RavenR Capital boss Gary Gilford, Irina Dilkinska usually avoided or ignored difficult questions and made herself unavailable whenever possible, which made it difficult for anyone to know exactly what was happening in Bulgaria. (He used to call Sofia HQ’s unwillingness to answer questions “the Bulgarian flu.”) In late 2016, Hogan Lovells concluded that, on balance, and subject to several changes, including tighter promoter contracts, “based on the terms of the MLM agreement… [OneLife] will not constitute a pyramid promotional scheme,” although they did add that there were elements which were “questionable and could create the impression [that it was].”5 Ruja was determined to squeeze as much credibility from her lawyers as she could: She read through the report carefully and added a small note in the margin: “Can we here pls also say that it is not a “Ponzi” scheme??”i (Hogan Lovells later told the Times that they were unable to comment on their work for OneCoin, but “if they saw anything in a client’s business which creates a requirement to report to the appropriate authorities then it goes without saying that we would do that.”)
Ruja saw lawyers more like PR than as a source of genuine legal advice. Negative legal advice was usually ignored, while anything that showed the company in a good light was used in marketing materials, or to persuade other organizations to work with her. And it was two of her well-spoken professionals that landed the company’s biggest PR coup of all.
As OneCoin grew into a billion-dollar company, Ruja realized her media and comms team in Sofia were not up to the job. They regularly published press releases full of spelling mistakes and unprofessional language about “haters.” By mid-2016, Ruja decided to get serious about PR. She hired the libel specialists Carter-Ruck, who were known for aggressively (and successfully) defending the reputations of famous clients, including Russian oligarchs and the Church of Scientology. Via her security adviser Frank Schneider’s firm Sandstone, Ruja also hired a London-based “crisis comms” firm called Chelgate run by Terence Fane-Saunders, a charming and eccentric PR veteran. Chelgate was asked to help improve her image, and work alongside Carter-Ruck whenever needed.
Over the course of late 2016 and mid-2017, Chelgate, Carter-Ruck, Frank Schneider and OneCoin representatives met periodically to consider various PR, legal and media challenges. They often talked about critics, who they described as Bitcoin fans worried by OneCoin’s success. They discussed creating an international advisory group comprised of House of Lords luminaries and complained that the City of London Police were unfairly targeting the firm. On one occasion, a briefing note was prepared about the prolific BehindMLM contributor Tim “Tayshun” Curry. They sometimes emailed whenever bad news popped up. In January 2017, Max von Arnim, an external part-time consultant to RavenR Capital in London, spotted that BehindMLM had connected RavenR Capital with OneCoin. He asked Gary Gilford if “there is a way to diminish the visual link of RavenR and O[ne]C[oin]?” Carter-Ruck replied there was little they could do legally, while Terence explained that it was “tricky” to push negative stories down the Google search list, since “pushing it down really requires burying it under plenty of other stories, each of which need search engine optimisation to push them up.” In a similar vein, one of Carter-Ruck’s first jobs, in July 2016, was to send a letter to the editors of the crypto news site Coin Telegraph, which had called OneCoin a Ponzi scheme. “This allegation is false and seriously defamatory. OneCoin is neither a Ponzi Scheme nor a Pyramid Scheme,” wrote the law firm. “OneCoin sells legitimate products of genuine value such as the OneCoin cryptocurrency… Our Client Dr. Ruja Ignatova has also been caused serious embarrassment and distress.” They asked that Coin Telegraph remove the article, or legal action would follow. Shortly afterwards, Carter-Ruck did the same thing to former investor Jen McAdam who had also been criticizing the firm online. (Neither Coin Telegraph nor Jen removed the criticism.)
Item six on the agenda at the group’s meeting in November 2016 was Ruja’s latest headache: the UK’s financial regulator, the Financial Conduct Authority, had recently issued an investor warning about OneCoin on its website. “We believe consumers should be wary of dealing with OneCoin,” it read. “We are concerned about the potential risk this poses to UK consumers.”
Ruja was furious when she heard about the warning, shouting at Irina that she was being “unfairly” treated. She was right to be worried. Overseeing Europe’s biggest financial hub had made the FCA a primus inter pares among financial regulators and several other countries issued similar warnings shortly after the FCA’s, including Latvia, Nigeria, Uganda, Croatia, Thailand and Spain. Within days of the warning being published, BehindMLM critics started sending it to potential investors, advising them to avoid the company. Ruja wanted the notice removed and, in May 2017, a Chelgate staffer spotted a potential solution. When the FCA was created to regulate London’s financial and banking sector after the 2009 crash, cryptocurrencies barely existed and so were not placed under its jurisdiction. As a result, even as late as 2016, no one was responsible for keeping tabs on this fast-growing sector, including the FCA. “It is not a matter of them acting in breach of their obligations, rather beyond them,” read an internal memo from Chelgate. What’s more, this strange notice seemed to be more like a press release than an official warning, for which there was no precedent. At some point in summer 2017, Carter-Ruck sent a letter to the regulator stating that the notice should be removed because it was, quite literally, none of their business.
With the scam in full swing and being aggressively marketed in the UK, the FCA removed their warning. The exact reasons are unclear because the FCA refuses to release any correspondence between them and organizations working for OneCoin. Perhaps the understaffed regulator thought Carter-Ruck had a point, and they didn’t fancy a scrap with its fearsome lawyers. Whatever the reason, on August 2, 2017, the web page warning consumers about the biggest Ponzi scheme in the world suddenly vanished.6
Ruja was thrilled when she heard the news. Within hours, OneCoin promoters announced that the FCA no longer considered OneCoin a fraudulent company (which wasn’t true). From Brazil to Uganda to the United States, promoters incorporated the removal story into their marketing materials. Canada’s top OneCoin pimp, Ken Labine, triumphantly told his followers: “If [the FCA] still thought we were a fraudulent company… then, guess what, that warning’s not removed. Game over!” Even the BehindMLM crew found it hard to argue.
Some of the sharpest legal minds around—clever enough to spot the technical flaws in an FCA warning, to advise on the minutiae of crypto law, and to structure complex house purchases via offshore companies—were simultaneously unable to see the biggest Ponzi scheme in 20 years staring them right in the face. Money has a funny way of fencing off difficult questions and incentivizing strategic and defensible ignorance. It is not corruption per se, at least not in the classic sense. But it shows how those with money can, through pressure, legal weight and sponsorship, subtly shape the environment to their advantage.
Unfortunately for Ruja, she soon had far bigger problems to worry about. And this time not even her well-spoken professionals could help her.
i In March 2017, Hogan Lovells sent Ruja, Irina and Gary Gilford a follow-up report entitled “Good State Report,” which contained dozens of sensible suggestions about how to improve its procedures to stay on the right side of the law, including registering with the Direct Selling Association, the UK’s industry body for MLM. But most of these were subsequently ignored.