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.
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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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CISO Podcast: Talking Anti-Phishing Solutions
Simon Gibson earlier this year published the report, “GigaOm Radar for Phishing Prevention and Detection,” which assessed more than a dozen security solutions focused on detecting and mitigating email-borne threats and vulnerabilities. As Gibson noted in his report, email remains a prime vector for attack, reflecting the strategic role it plays in corporate communications.
Earlier this week, Gibson’s report was a featured topic of discussions on David Spark’s popular CISO Security Vendor Relationship Podcast. In it, Spark interviewed a pair of chief information security officers—Mike Johnson, CISO for SalesForce, and James Dolph, CISO for Guidewire Software—to get their take on the role of anti-phishing solutions.
“I want to first give GigaOm some credit here for really pointing out the need to decide what to do with detections,” Johnson said when asked for his thoughts about selecting an anti-phishing tool. “I think a lot of companies charge into a solution for anti-phishing without thinking about what they are going to do when the thing triggers.”
As Johnson noted, the needs and vulnerabilities of a large organization aligned on Microsoft 365 are very different from those of a smaller outfit working with GSuite. A malicious Excel macro-laden file, for example, poses a credible threat to a Microsoft shop and therefore argues for a detonation solution to detect and neutralize malicious payloads before they can spread and morph. On the other hand, a smaller company is more exposed to business email compromise (BEC) attacks, since spending authority is often spread among many employees in these businesses.
Gibson’s radar report describes both in-line and out-of-band solutions, but Johnson said cloud-aligned infrastructures argue against traditional in-line schemes.
“If you put an in-line solution in front of [Microsoft] 365 or in front of GSuite, you are likely decreasing your reliability, because you’ve now introduced this single point of failure. Google and Microsoft have this massive amount of reliability that is built in,” Johnson said.
So how should IT decision makers go about selecting an anti-phishing solution? Dolph answered that question with a series of questions of his own:
“Does it nail the basics? Does it fit with the technologies we have in place? And then secondarily, is it reliable, is it tunable, is it manageable?” he asked. “Because it can add a lot overhead, especially if you have a small team if these tools are really disruptive to the email flow.”
Dolph concluded by noting that it’s important for solutions to provide insight that can help organizations target their protections, as well as support both training and awareness around threats. Finally, he urged organizations to consider how they can measure the effectiveness of solutions.
“I may look at other solutions in the future and how do I compare those solutions to the benchmark of what we have in place?”
Listen to the Podcast: CISO Podcast
Phish Fight: Securing Enterprise Communications
Yes, much of the world may have moved on from email to social media and culturally dubious TikTok dances, yet traditional electronic mail remains a foundation of business communication. And sadly, it remains a prime vector for malware, data leakage, and phishing attacks that can undermine enterprise protections. It doesn’t have to be that way.
In a just released report titled “GigaOm Radar for Phishing Prevention and Detection,” GigaOm Analyst Simon Gibson surveyed more than a dozen enterprise-focused email security solutions. He found a range of approaches to securing communications that often can be fitted together to provide critical, defense-in-depth protection against even determined attackers.
Figure 1. GigaOm Radar for Email Phishing Prevention and Detection
“When evaluating these vendors and their solutions, it is important to consider your own business and workflow,” Gibson writes in the report, stressing the need to deploy solutions that best address your organization’s business workflow and email traffic. “For some it may be preferable to settle on one comprehensive solution, while for others building a best-of-breed architecture from multiple vendors may be preferable.”
In a field of competent solutions, Gibson found that Forcepoint, purchased recently by Raytheon, stood apart thanks to the layered protections provided by its Advanced Classification Engine. Area 1 and Zimperium, meanwhile, are both leaders that exhibit significant momentum, with Area 1 boosted by its recent solution partnership with Virtru, and Zimperium excelling in its deep commitment to mobile message security.
A mobile focus is timely, Gibson says in a video interview for GigaOm. He says companies are “tuning the spigot on” and enabling unprecedented access and reliance on mobile devices, which is creating an urgent need to get ahead of threats.
Gibson’s conclusion in the report? He singles out three things: Defense in depth, awareness of existing patterns and infrastructure, and a healthy respect for the “human factor” that can make security so hard to lock down.
When Is a DevSecOps Vendor Not a DevSecOps Vendor?
DevOps’ general aim is to enable a more efficient process for producing software and technology solutions and bringing stakeholders together to speed up delivery. But we know from experience that this inherently creative, outcome-driven approach often forgets about one thing until too late in the process—security. Too often, security is brought into the timeline just before deployment, risking last minute headaches and major delays. The security team is pushed into being the Greek chorus of the process, “ruining everyone’s fun” by demanding changes and slowing things down.
But as we know, in the complex, multi-cloud and containerized environment we find ourselves in, security is becoming more important and challenging than ever. And the costs of security failure are not only measured in slower deployment, but in compliance breaches and reputational damage.
The term “DevSecOps” has been coined to characterize how security needs to be at the heart of the DevOps process. This is in part principle and part tools. As a principle, DevSecOps fits with the concept of “shifting left,” that is, ensuring that security is treated as early as possible in the development process. So far, so simple.
From a tooling perspective, however, things get more complicated, not least because the market has seen a number of platforms marketing themselves as DevSecOps. As we have been writing our Key Criteria report on the subject, we have learned that not all DevSecOps vendors are necessarily DevSecOps vendors. Specifically, we have learned to distinguish capabilities that directly enable the goals of DevSecOps from a process perspective, from those designed to support DevSecOps practices. We could define them as: “Those that do, and those that help.”
This is how to tell the two types of vendor apart and how to use them.
Vendors Enabling DevSecOps: “Tools That Do”
A number of tools work to facilitate the DevSecOps process -– let’s bite the bullet and call them DevSecOps tools. They help teams set out each stage of software development, bringing siloed teams together behind a unified vision that allows fast, high-quality development, with security considerations at its core. DevSecOps tools work across the development process, for example:
- Create: Help to set and implement policy
- Develop: Apply guidance to the process and aid its implementation
- Test: Facilitate and guide security testing procedures
- Deploy: Provide reports to assure confidence to deploy the application
The key element that sets these tool sets apart is the ability to automate and reduce friction within the development process. They will prompt action, stop a team from moving from one stage to another if the process has not adequately addressed security concerns, and guide the roadmap for the development from start to finish.
Supporting DevSecOps: “Tools That Help”
In this category we place those tools which aid the execution, and monitoring, of good DevSecOps principles. Security scanning and application/infrastructure hardening tools are a key element of these processes: Software composition analysis (SCA) forms a part of the development stage, static/dynamic application security testing (SAST/DAST) is integral to the test stage and runtime app protection (RASP) is a key to the Deploy stage.
Tools like this are a vital part of the security layer of security tooling, especially just before deployment – and they often come with APIs so they can be plugged into the CI/CD process. However, while these capabilities are very important to DevSecOps, they can be seen in more of a supporting role, rather than being DevSecOps tools per se.
DevSecOps-washing is not a good idea for the enterprise
While one might argue that security should never have been shifted right, DevSecOps exists to ensure that security best practices take place across the development lifecycle. A corollary exists to the idea of “tools that help,” namely that organizations implementing these tools are not “doing DevSecOps,” any more than vendors providing these tools are DevSecOps vendors.
The only way to “do” DevSecOps is to fully embrace security at a process management and governance level: This means assessing risk, defining policy, setting review gates, and disallowing progress for insecure deliverables. Organizations that embrace DevSecOps can get help from what we are calling DevSecOps tools, as well as from scanning and hardening tools that help support its goals.
At the end of the day, all security and governance boils down to risk: If you buy a scanning tool so you can check a box that says “DevSecOps,” you are potentially adding to your risk posture, rather than mitigating it. So, get your DevSecOps strategy fixed first, then consider how you can add automation, visibility, and control using “tools that do,” as well as benefit from “tools that help.”
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