Ex-spy admits he worked for accused crypto fraudster

Ex-spy Frank Schneider admitted that he and his Luxembourg company worked for alleged crypto-scammer Ruja Ignatova, who is a fugitive from police forces worldwide for an alleged multi-billion-euro OneCoin fraud.

“When I worked there, that was years ago, this [the nature of OneCoin] wasn’t entirely clear to me. Now I see that many funds have disappeared” , Schneider said during an interview with public radio broadcaster 100,7 on Monday . 

“If it was fraud, and then money laundering, then I need to be responsible for what I possibly might have done there”, Schneider said.

Schneider also confirmed that Sandstone, the company he founded after leaving Luxembourg’s intelligence agency SREL in 2008 after eight years of service, worked for the cryptocurrency company. Schneider described Sandstone as a “government-funded economic intelligence firm” in testimony given under oath in a separate case at a court in Tel Aviv in Israel in 2012.  

OneCoin, based in Bulgaria and registered in Belize and Dubai, was actually a pyramid scheme that defrauded worldwide customers $4 billion (€`3.8 billion), making it one of the largest scams ever perpetrated, said US prosecutors who sought Ignatova’s arrest beginning in 2017.  

Ignotava, who was born in Bulgaria but has German citizenship, is charged in the US with money laundering, wire fraud and securities fraud.  German prosecutors last month also charged Ignatova with deceiving investors by setting the value of OneCoin’s currency internally rather than allowing it to be based on market forces. 

Investigations into OneCoin had been under way before Italy and Germany banned the currencies in 2016 and 2017.

Despite that, Schneider told 100,7 he brought fellow Luxembourg citizen Pierre Arens aboard as the company’s CEO from May to October 2017. Arens, who was preparing an initial public offering of OneCoin shares, told the Luxemburger Wort at the time that he was innocent of any wrongdoing. 

Schneider’s work for OneCoin involved tracking the progress of law enforcement investigations into the fraud, US officials alleged in court documents. Schneider on Monay denied that he or Sandstone had obtained secret information about an ongoing Europol investigation into the cryptocurrency company.  

A French court in January granted a US request to extradite the former Luxembourg spy, who is currently under house arrest at his home in France, to face trial in New York. 

Schneider is fighting that extradition order ahead of a trial at which he could face up to 40 years in prison if convicted. The extradition will need eventually to be approved by France’s prime minister. Schneider instead wants to face justice in Luxembourg, he told 100,7.    

To potentially halt his extradition to the US, Luxembourg’s prosecution would have to open its own investigation and issue a European arrest warrant. A spokesman for the prosecution previously told the Luxembourg Times that “it has nothing to do” with the case. 

The Luxembourg government also said previously it would not intervene in the case given the separation of powers between executive and judiciary, according to a response to a parliamentary question by the opposition Christian Democrats. 

Schneider denied being fully aware of the extent of the possibly fraud, despite there being some indications, he told the public broadcaster. He said he did not believe Ignatova disappeared on her own to avoid repercussions for OneCoin’s collapse.

Schneider last communicated with Ignatova in October 2017 in an exchange of text messages, he said. Ignatova texted him so say “safe home” in English, which was unusual because they usually spoke in German, Schneider said.

OneCoin-related accounts in China, Dubai, Australia and South Korea are still worth over €1 billion, Schneider said.

Schneider is also a defendant in a Luxembourg court case over the wiretapping scandal around former Prime Minister Jean-Claude Juncker. He has been acquitted but the prosecution is appealing the decision, with the current extradition proceedings impeding another Luxembourg trial.

Sandstone is in the process of voluntary liquidation, according to documents filed in Luxembourg’s business register. Schneider is the company’s sole shareholder and was appointed as its liquidator, according to public documents. 

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