Legal Twist in OneCoin Case as Convicted Lawyer Mark Scott Gets Bail

Mark Scott, a lawyer connected to the OneCoin cryptocurrency scam, has been granted bail pending appeal by Judge Edgardo Ramos of the U.S. District Court for the Southern District of New York. Despite his conviction for fraud and money laundering, Scott's bail was approved due to his medical conditions and the non-violent nature of his offenses. Meanwhile, Avraham Eisenberg is not so lucky as he was convicted of fraud related to a $110 million exploit of Mango Markets. Former Binance CEO CZ is also dealing with his own legal challenges but Binance co-founder He Yi says CZ received the ‘most optimal outcome’.

Court Approves Bail for OneCoin Lawyer

Mark Scott, a lawyer linked to the notorious OneCoin crypto scheme, has been granted bail pending an appeal, despite his recent conviction for fraud and money laundering. This decision was made by Judge Edgardo Ramos of the United States District Court for the Southern District of New York, who pointed towards Scott’s medical conditions and the non-violent nature of his crimes as reasons for why he does not pose a flight risk or a danger to the community.

Scott was sentenced to 10 years in prison three months ago but will now remain on bail due to legal questions raised by his defense about the reliability of key testimony by Konstantin Ignatov. Konstantin was a major figure in the OneCoin scheme and the brother of fugitive co-founder Ruja Ignatova. Ignatov's alleged perjury is central to the appeal. While the judge acknowledged that a reversal or new trial is pretty unlikely, the questions raised are not frivolous and are integral to the merits of Scott’s conviction.

The background of this case stretches back to November of 2019 when Scott was convicted of conspiracy to commit bank fraud and money laundering after laundering millions for OneCoin. Meanwhile, other OneCoin associates have also faced severe penalties. Co-founder Karl Sebastian Greenwood received a 20-year sentence and was ordered to pay $300 million in restitution. Former chief compliance officer Irinia Dilkinska was sentenced to four years after pleading guilty to felony charges.

What Happened with OneCoin?

OneCoin was a notorious cryptocurrency-based Ponzi scheme that was founded in 2014 by Ruja Ignatova and operated by OneCoin Ltd. and OneLife Network Ltd. The scheme was presented as a legitimate cryptocurrency, with claims of a mining capability for 120 billion coins and functionalities similar to other established cryptocurrencies, including e-wallets for transactions. However, the reality was very different. There was no genuine blockchain technology underpinning OneCoin and no operational payment system.

Instead, OneCoin’s primary business revolved around selling educational courses on cryptocurrencies through a multi-level marketing (MLM) model. These courses, which covered topics from trading to investing, were also very often plagiarized, and buyers were incentivized with commissions to recruit more participants. The people who bought these courses received tokens claimed to be mineable for OneCoins, tying the educational aspect directly to the purported crypto mining.

The scheme also included an internal marketplace called OneCoin Exchange xcoinx, which supposedly allowed users to convert OneCoin into other currencies, but only if they purchased beyond the beginner package. The platform shut down in January of 2017, denying most withdrawal requests and worsening suspicions about the scheme's legitimacy.

International scrutiny increased around 2016 as several countries began investigations. Entities like the Direct Selling Association in Norway and the Hungarian Central Bank started labeling OneCoin a pyramid scheme. Despite a brief claim in 2017 that it received legal status in Vietnam, the government quickly denied these assertions.

The situation got even worse when Bulgarian authorities raided OneCoin’s offices in early 2018. Ruja Ignatova, the face of OneCoin, vanished in 2017 shortly after a warrant was issued for her arrest and has remained elusive since, earning her the moniker "Cryptoqueen." Her brother, Konstantin Ignatov, took over her role but was arrested in 2019.

Jury Convicts Mango Markets Exploiter

Other crypto exploiters are also facing the law. Avraham “Avi” Eisenberg, who was involved in a $110 million exploit of Mango Markets, has been found guilty of multiple charges including wire fraud, commodities fraud, and commodities manipulation. The verdict was delivered by a jury in the United States District Court for the Southern District of New York on Apr. 18 following deliberations that began after closing arguments on Apr. 17.

During the two-week trial, Eisenberg's defense argued that his actions were part of a legitimate trading strategy, though he ultimately got away with about $110 million from the platform. Eisenberg returned $67 million after the exploit, but kept more than $40 million after a community governance vote on the decentralized exchange. Prosecutors were not so easily fooled and held firm that his activities amounted to fraud.

The trial's outcome now paves the way for even more legal challenges for Eisenberg, including potential civil enforcement actions by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, which paused their proceedings pending the outcome of this trial. These cases are expected to resume soon.

Eisenberg, who has been in U.S. custody since January of 2023 after his arrest in Puerto Rico in December 2022, now faces up to 20 years in prison. Judge Richard Berman will sentence him on Jul. 29.

Mango Markets Exploit

The Mango Markets cryptocurrency platform was exploited for over $110 million due to price manipulation and the strategic use of perpetual futures. The exploiter, initially using two wallets funded with $5 million USDC each, manipulated the price of MNGO tokens through large trades in both futures and spot markets. This inflated the value of MNGO, which allowed the use of these tokens as collateral for a big loan which was then withdrawn in various crypto assets.

After the exploit, the attacker actively engaged with Mango Markets' decentralized autonomous organization (DAO), even proposing to return $67 million of the stolen funds in exchange for certain concessions, including waiving potential claims and stopping any criminal pursuit. This was after the attacker declared his actions as legal and within the trading framework of Mango Markets. However, these actions led to his arrest in New York on charges of market manipulation.

Mango Markets filed a civil lawsuit against Avraham Eisenberg on Jan. 25, claiming his actions during the exploit were a "brazen attack" involving conversion, fraudulent misrepresentation, and unjust enrichment. The lawsuit challenged the legitimacy of an agreement made with Eisenberg by the DAO, arguing it was under duress and should be invalidated. This case is very interesting as it may set legal precedents about the governance, jurisdiction, and accountability of DAOs, which are relatively new and lack extensive legal grounding.

CZ's Outcome 'Most Optimal'?

CZ is also still grappling with his own legal turmoil, but is it really that bad? The former Binance CEO is apparently in a relatively stable situation despite his upcoming sentencing in the United States for a felony charge, according to Binance co-founder He Yi. During a recent Binance Chinese Meetup at the Token2049 conference in Dubai, Yi expressed confidence in CZ's position, stating that the circumstances surrounding his legal issues were anticipated and that the current outcome is optimal.

CZ, who resigned from his role after a hefty $4.3 billion settlement with U.S. authorities last November, will be sentenced on Apr. 30. He could face up to 10 years in prison, although sentencing guidelines suggest 12 to 18 months.

Currently, CZ is on a $175 million bond in the U.S. with restricted travel due to a medical issue involving his child. He has made requests to travel to Dubai, where he resides, which lead to the U.S. Attorney’s Office seizing his passports.

Since his resignation, Binance has made some serious efforts to distance itself from CZ's leadership. His successor, Richard Teng, is fully focused on a new direction for the company, a clear departure from CZ's tenure. Meanwhile, Binance was recently granted a Virtual Asset Service Provider license in Dubai, which reportedly came with conditions including CZ relinquishing voting rights in Binance FZE, the local entity.

He Yi, who has personal ties with CZ as the mother of at least two of his children, also owns a stake in Binance. Despite her personal connections, Yi has denied any current romantic involvement with CZ.