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OneCoin ‘CryptoQueen’ sued over alleged $4bn cryptocurrency Ponzi scheme

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Is the end in sight for cryptojacking cyberattacks?
For some crooks, sneaky cryptocurrency mining may not be lucrative enough anymore. The question is, where do they go next?

The operators of OneCoin, Konstantin Ignatov and Ruja Ignatova, are at the heart of a new lawsuit which alleges the brother and sister duo ran a multimillion-dollar Ponzi scheme designed to dupe cryptocurrency investors.

The lawsuit (.PDF), filed this week by law agency Silver Miller on behalf of investor Christine Grablis with the US Southern District Court of New York, aims to push a class-action case forward against OneCoin.

“[They] created a multi-billion-dollar “cryptocurrency” company based completely on lies and deceit,” the lawsuit claims. “They promised big returns and minimal risk, but this business was a pyramid scheme based on smoke and mirrors more than zeroes and ones. Investors were victimized while the defendants got rich.”

According to the complaint, Bulgaria-based OneCoin and the organization’s subsequent “never-ending” Initial Coin Offering (ICO) “purported cryptocurrency that never really existed, on a blockchain that never really existed, born from mining farms that never really existed, yet fraudulently sold to investors throughout the world through a densely-packed multi-level-marketing system.”

In other words, investors were allegedly defrauded out of their cash due to OneCoin’s Ponzi scheme. An estimated $4 billion in revenue is believed to have been generated.

Grablis alleges that Konstantin and Ruja unjustly enriched themselves by duping cryptocurrency traders into purchasing participation packages and memberships, of which these funds would be used to pay off existing investors. In turn, investors would be driven to sign others up, which kept the alleged Ponzi scheme running.

See also: What should you do when your ICO is dead in the water? Flog it on eBay

Whether wrapped up in a cryptocurrency bow or not, Ponzi schemes are a well-known way to scam individuals as, more often than not, members lose out on their funds while those at the top profit.

“Investors in OneCoin trader packages/memberships have little to show for their investments other than broken promises and mounting financial burdens,” the complaint reads.

Grablis invested $15,800 into a OneCoin membership in 2015. By August 2016, the investor had poured roughly $103,000 into the scheme. Out-of-pocket losses are now claimed to be approximately $130,000.

CNET: HTC hopes Exodus 1 phone will cash in on cryptocurrency

The investor is seeking damages over the alleged violation of securities laws. Grablis also hopes to launch a successful class-action suit to claw back money that other investors reportedly lost, described as “thousands upon thousands of investors duped into purchasing falsely promoted, unregistered securities that leave even the most ardent cryptocurrency believers crying foul.”

OneCoin launched in 2014 with Konstantin and Ruja at the helm and claimed to have three million active users worldwide.

The complaint alleges that both OneCoin executives promoted the fraudulent scheme at a variety of public events. Ruja, in particular, reinvented herself as the self-titled “CryptoQueen” and “Her Royal Highness” while promoting OneCoin not only in person but also on a variety of social media channels — at least, until she vanished from public view in 2017.

In March, the Southern District of New York announced charges against Konstantin and subsequently arrested him at Los Angeles International Airport as the leader of the scheme after assuming the role in 2017.

TechRepublic: Cryptocurrency market to explode due to fast transaction speeds, enterprise investment

Ruja is wanted for wire fraud, securities fraud, and money laundering offenses but is yet to be apprehended.

“As we allege, OneCoin was a cryptocurrency existing only in the minds of its creators and their co-conspirators,” said FBI Assistant Director-in-Charge William Sweeney. “Unlike authentic cryptocurrencies, which maintain records of their investors’ transaction history, OneCoin had no real value.”  

“The only ones who stood to benefit from its existence were its founders and co-conspirators,” Sweeney added. “Whether you’re dealing with virtual currency or cold, hard cash, we urge the public to exercise due diligence with any investment.”

Previous and related coverage


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Work from Home Security

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Spin Master is a leading global children’s entertainment company that invents toys and games, produces dozens of television and studio series that are distributed in 160 countries, and creates a variety of digital games played by more than 30 million children. What was once a small private company founded by childhood friends is now a public global supply chain with over 1,500 employees and 28 offices around the world.

Like most organizations in 2020, Spin Master had to adapt quickly to the new normal of remote work, shifting most of its production from cubicles in regional and head offices to hundreds of employees working from home and other remote locations.

This dramatic shift created potential security risks, as most employees were no longer behind the firewall on the corporate network. Without the implementation of hardened endpoint security, the door would be open for bad actors to infiltrate the organization, acquire intellectual property, and ransom customer information. Additionally, the potential downtime caused by a security breach could harm the global supply chain. With that in mind, Spin Master created a self-imposed 30-day deadline to extend its network protection capabilities to the edge.

Key Findings:

  • Think Long Term: The initial goal of establishing a stop-gap work-from-home (WFH) and work-from-anywhere (WFA) strategy has since morphed into a permanent strategy, requiring long-term solutions.
  • Gather Skills: The real urgency posed by the global pandemic made forging partnerships with providers that could fill all the required skill sets a top priority.
  • Build Momentum: The compressed timeline left no room for delay or error. The Board of Directors threw its support behind the implementation team and gave it broad budget authority to ensure rapid action, while providing active guidance to align strategy with action.
  • Deliver Value: The team established two key requirements that the selected partner must deliver: implementation support and establishing an ongoing managed security operations center (SOC).
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Key Criteria for Evaluating Privileged Access Management

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Privileged Access Management (PAM) enables administrative access to critical IT systems while minimizing the chances of security compromises through monitoring, policy enforcement, and credential management.

A key operating principle of all PAM systems is the separation of user credentials for individual staff members from the system administration credentials they are permitted to use. PAM solutions store and manage all of the privileged credentials, providing system access without requiring users to remember, or even know, the privileged password. Of course, all staff have their own unique user ID and password that they use to complete everyday tasks such as accessing email and writing documents. Users who are permitted to handle system administration tasks that require privileged credentials log into the PAM solution, which provides and controls such access according to predefined security policies. These policies control who is allowed to use which privileged credentials when, where, and for what tasks. An organization’s policy may also require logging and recording of the actions undertaken with the privileged credentials.

Once implemented, PAM will improve your security posture in several ways. The first is by segregating day-to-day duties from duties that require elevated access, reducing the risk of accidental privileged actions. Secondly, automated password management reduces the possibility that credentials will be shared while also lowering the risk if credentials are accidentally exposed. Finally, extensive logging and activity recording in PAM solutions aids audits of critical system access for both preventative and forensic security.

How to Read this Report

This GigaOm report is one of a series of documents that helps IT organizations assess competing solutions in the context of well-defined features and criteria. For a fuller understanding consider reviewing the following reports:

Key Criteria report: A detailed market sector analysis that assesses the impact that key product features and criteria have on top-line solution characteristics—such as scalability, performance, and TCO—that drive purchase decisions.

GigaOm Radar report: A forward-looking analysis that plots the relative value and progression of vendor solutions along multiple axes based on strategy and execution. The Radar report includes a breakdown of each vendor’s offering in the sector.

Vendor Profile: An in-depth vendor analysis that builds on the framework developed in the Key Criteria and Radar reports to assess a company’s engagement within a technology sector. This analysis includes forward-looking guidance around both strategy and product.

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Adventist Risk Management Data Protection Infrastructure

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Companies always want to enhance their ability to quickly address pressing business needs. Toward that end, they look for new ways to make their IT infrastructures more efficient—and more cost effective. Today, those pressing needs often center around data protection and regulatory compliance, which was certainly the case for Adventist Risk Management. What they wanted was an end-to-end, best-in-class solution to meet their needs. After trying several others, they found the perfect combination with HYCU and Nutanix, which provided:

  • Ease of deployment
  • Outstanding ROI
  • Overall TCO improvement

Nutanix Cloud Platform provides a software-defined hyperconverged infrastructure, while HYCU offers purpose-built backup and recovery for Nutanix. Compared to the previous traditional infrastructure and data protection solutions in use at Adventist Risk Management, Nutanix and HYCU simplified processes, speeding day-to-day operations up to 75%. Now, migration and update activities typically scheduled for weekends can be performed during working hours and help to increase IT staff and management quality of life. HYCU further increased savings by providing faster and more frequent points of recovery as well as better DR Recovery Point Objective (RPO) and Recovery Time Objective (RTO) by increasing the ability to do daily backups from one to four per day.

Furthermore, the recent adoption of Nutanix Objects, which provides secure and performant S3 storage capabilities, enhanced the infrastructure by:

    • Improving overall performance for backups
    • Adding security against potential ransomware attacks
    • Replacing components difficult to manage and support

In the end, Nutanix and HYCU enabled their customer to save money, improve the existing environment, and, above all, meet regulatory compliance requirements without any struggle.

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