U.S. v. Scott et al., No. 1:17-cr-00630 (S.D.N.Y. filed Oct. 12, 2017)

On November 21, 2019, Mark S. Scott, a former partner at law firm Locke Lord LLP, was convicted of one count of conspiracy to commit money laundering and one count of conspiracy to commit bank fraud in connection with his work for OneCoin Ltd. Mr. Scott was found guilty following a three-week trial in the U.S. District Court for the Southern District of New York.

OneCoin, which was founded in 2014, operates as a multi-level marketing network through which members receive commissions for recruiting others to purchase cryptocurrency packages. OneCoin allegedly claimed that its cryptocurrency was “mined” using company servers and that the value of that cryptocurrency was based on market supply and demand (with the value growing from €0.50 to approximately €29.95 per coin in or about January 2019). In fact, OneCoin’s cryptocurrency was not mined using computer resources and the value of that cryptocurrency was not based on market supply and demand but rather determined internally. Further, OneCoin’s cryptocurrency did not actually operate on a blockchain and, therefore, could not be used to purchase anything.

OneCoin, which continues to operate to this day, claimed to have over three million members worldwide. Records obtained in the course of the government investigation showed that, between Q4 2014 and Q3 2016 alone, OneCoin generated €3.4 billion in sales revenue and €2.2 billion in “profits.” Mr. Scott was convicted of laundering approximately US $400 million worth of proceeds from token sales through fraudulent investment funds that he set up and operated. Mr. Scott was paid more than $50 million, which he used to buy a yacht, several seaside homes, and luxury cars.

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