U.S. prosecutors and law enforcement officers in New York on Friday announced that they had filed criminal charges against the leaders of a pyramid scheme that sold "fraudulent cryptocurrency" to unsuspecting investors.

Authorities from the Southern District of New York and the New York District Attorney, the investigative arm of the IRS and the FBI said that OneCoin founders Konstantin Ignatov and his older sister Ruja Ignatova stole billions of dollars from consumers through "a multi-level marketing network" they launched in 2014.

The 33-year-old Ignatov, who was arrested at Los Angeles International Airport on March 6, faces a wire fraud conspiracy charge. The 38-year-old Ignatova, who has been at large since disappearing from public view in October 2017, faces wire fraud, securities fraud and conspiracy to commit money laundering. Each charge carries a maximum 20-year sentence.

"As alleged, these defendants created a multibillion-dollar 'cryptocurrency' company based completely on lies and deceit," Manhattan U.S. Attorney Geoffrey S. Berman said in a statement. "They promised big returns and minimal risk, but, as alleged, this business was a pyramid scheme based on smoke and mirrors more than zeroes and ones. Investors were victimized while the defendants got rich."

Cryptocurrency has been slowly making its way into the mainstream, but has also been dogged by concerns about its misuse and vulnerability. Yet Rafael Yakobi, a partner at The Crypto Lawyers, a San Diego-based law firm, said that while he was "impressed by the size of the conspiracy," the indictment was an isolated event that wasn't representative of legitimate coin offerings or the wider crypto industry.

"Legitimately decentralized cryptocurrencies are not susceptible to these types of schemes because if sufficiently decentralized, no individual can collect the money and run away with it," Yakobi said.

He added that investors should treat cryptocurrency with the same care as other investments. "Investors have to be responsible for their decisions," Yakobi said.

According to the indictment, OneCoin members recruited others to purchase cryptocurrency packages. The structure enabled OneCoin to develop a huge network that may have totaled more than three million members.

Bulgaria-based OneCoin claimed that it mined cryptocurrency using servers that the company operated and that the value of OneCoin was based on market supply and demand. OneCoin was worth less than a dollar, but as of January 2019, OneCoin had a value of over $30. But investigators said that OneCoin itself determined the value of a token and that it did no cryptocurrency mining.

Cryptocurrency mining is a process by which individuals use special software to solve math problems and record cryptocurrency transactions on a virtual ledger. These so-called cryptocurrency miners earn tokens for their efforts.

Investigators say that Ignatova created OneCoin, which continues to operate, to defraud investors.

Investigators found that between the fourth quarter of 2014 and the third quarter of 2016 alone, OneCoin Ltd. generated approximately $4 billion in sales revenue and earned "profits" of over $2.5 billion.

"This is an old scam with a virtual twist," IRS Special Agent in Charge John R. Tafur said in the press release. "As alleged in court documents, the cryptocurrency OneCoin was established for the sole purpose of defrauding investors. Ignatov and Ignatova allegedly convinced victims to invest in OneCoin based on complete lies about the virtual currency."

A third defendant, Mark S. Scott, also faces a money laundering charge related to the scheme. Scott, who is a former partner in a U.S. law firm, is accused of laundering more than $400 million through purported investment funds that had bank accounts at financial services firms in several countries, including the Cayman Islands and the Republic of Ireland.