The first conviction has been handed down in the investigation into OneCoin, a dubious Ponzi scheme that was pitched as a legitimate cryptocurrency and blockchain.

The outfit raised an estimated $4 billion before eventually being shut down in 2017. Mark Scott, an attorney who worked with the company in 2016, was convicted by the federal court in the Southern District of New York late last week on two charges — one count of conspiracy to commit money laundering and one count of conspiracy to commit bank fraud.

Prosecutors alleged that Scott had helped the founder of the company, Ruja Ignatova, form a series of fake private equity investment funds in the British Virgin Islands known as the “Fenero Funds.” Scott is said to have then disguised incoming transfers of approximately $400 million into the Fenero Funds as investments from “wealthy European families” when in reality the money was proceeds from OneCoin investors.

Scott is then alleged to have transferred the funds back to Ignatova and others involved in OneCoin, disguising them as investments from the Fenero funds to evade money-laundering procedures.

Scott profited handsomely his involvement as well, being paid more than $50 million that he used to purchase luxury vehicles, boats, a seaside home and luxury watches. His sentencing hearing is scheduled for Feb. 21, 2020.

The successful charges against Scott may be only the beginning when it comes to OneCoin. Founder Ignatova remains missing, but others have been named in relation to the scheme.

Amer Abdulaziz, the founder of Phoenix Thoroughbreds, a Dubai-based horse racing investment firm, has been named by Konstantin Ignatov, a co-founder of OneCoin, the brother of Ruja Ignatova and a cooperating witness for the U.S. attorney’s office, with involvement in the scheme.

Konstantin claims that Abdulaziz was “one of the main money launderers” for OneCoin and that he stole about $110 million from the company. Scott also testified that Abdulaziz was involved in the scheme. Abdulaziz, who has not been charged or named as a co-conspirator by the court, denies the allegations.

Konstantin himself was arrested earlier this year at the Los Angeles International Airport and charged with wire fraud. His cooperation with the U.S. attorney’s office was part of a plea deal.

The OneCoin scheme was one of the largest exploiting the frenzy around cryptocurrencies starting in 2015. The company said all the right things, claiming that it would be the next bitcoin and that it had established its own blockchain.

None of those things were true, with no mining and no blockchain and early investors profiting only from later investors, a classic Ponzi scheme. About 3 million people globally are believed to have been caught up in the scam, which was particularly popular in China.

Image: OneCoin/Sophos