A New York’s federal judge has announced his decision of appointing Levi & Korsinsky and Silver Miller as the lead counselors of the $4 billion class action lawsuit against the cryptocurrency Ponzi scheme OneCoin, in which Donald Berdeaux was appointed as the lead plaintiff of the suit.
The securities lawsuit alleges that OneCoin was a fraudulent investment program which hid behind the use of technical sophistication and fancy jargon, and thus led falsely informed investors to believe that the cryptocurrency had any actual value.
The class action lawsuit further claims that the OneCoin digital coins were being automatically generated solely based on the need of investors; however these were not only fake but didn’t even exist on a blockchain network, as essentially any real cryptocurrency works.
Prosecutors have already charged the self-proclaimed “CryptoQueen” Ruja Ignatova and her brother Konstantin Ignatov (who has pleaded not guilty) with multiple counts of fraud. Other people that have been labeled in the lawsuit were another OneCoin co-founder, Sebastian Greenwood, and the former lawyer of Locke Lord, Mark S. Scott, who was arrested in 2018 and is indicted for a money laundering conspiracy charge.
Missed Deadline by Plaintiff
U.S. District Judge Valerie Caproni has inquired as to why Donald Berdeaux, who was appointed this month as the class action suit’s lead plaintiff, has missed his July 19 deadline to seek lead counsel approval and ordered him to show cause as to why “this case should not be dismissed for failure to prosecute.” Having lost $755,000 to the suspects behind the fake cryptocurrency OneCoin, Berdeaux has filed for lead counsel along with submitting a brief claiming that the final versions of the motion had already been ready by the 17th of July, while mistakenly believing the deadline is on July 19th.
The judge warned the attorneys from Levi & Korsinsky LLP and Silver Miller for failing to comply with the court’s orders and deadlines after having approved Berdeaux’s lead counsel picks.
Furthermore, the judge advised against the act of duplicate work from the firms, rejecting a bid for Berdeaux to co-lead the case with Christine Grablis, who was the original filer of the proposed class action.
In her ruling, Judge Caproni only appointed Berdeaux as lead plaintiff, claiming she was uncomfortable with the the virtually nonexistent relationship between Grablis and Berdeaux. Her ruling was also based on the fact that Berdeaux had suffered more investor losses that dwarf Grablis’ own financial damage.
Berdeaux now has until August 2nd to file an amended complaint reflecting his lead plaintiff appointment while the defendants, who have yet to make an appearance in the case, have until September 6th to respond to these huge allegations.
David Silver, an attorney for Grablis, told Law360, a news agency that initially reported on the court’s decision:
“As cryptocurrency scams go, OneCoin earns its place on the Mount Rushmore of investment schemes, both for its size and for its audacity … they sold cryptocurrency that never existed, from mining farms that never existed, on a blockchain that never existed — and they managed to steal $4 billion from investors in the process.”