More than a decade after the OneCoin scam began, victims of the $4 billion cryptocurrency fraud scheme are now eligible for compensation from a $40 million fund of seized assets, as announced by the US Department of Justice on Monday. Between 2014 and 2019, the co-founders of OneCoin Ltd., Ignatova and Karl Sebastian Greenwood, orchestrated an international cryptocurrency investment scam that deceived up to 3.4 million investors worldwide. The scheme, which was operated from Sofia, Bulgaria, involved marketing and selling a fake cryptocurrency through a global multi-level-marketing network.
Investors from around the globe lost over $4 billion to the fraudulent cryptocurrency, which was promoted by a network of solicitors who promised tokens but did not actually involve any cryptocurrencies or blockchain technology. The scheme, described by the DOJ as one of the largest global fraud schemes in history, collapsed in 2017 after it was discovered that Ignatova and her team had manipulated the perceived value of OneCoin by automatically generating new coins. Following the collapse, the DOJ offered a $5 million reward for information leading to the capture of the missing Cryptqueen in June 2024. Greenwood, who allegedly referred to investors as 'idiots', pleaded guilty to federal wire fraud and money laundering charges in 2022.
According to US Attorney Jay Clayton for the Southern District of New York, 'OneCoin's founders sold a false promise disguised as cryptocurrency, resulting in losses of over $4 billion worldwide for victims.' The DOJ has stated that it will continue to work towards seizing criminal proceeds and prioritizing the return of funds to victims. This development comes approximately four weeks after the FTX Recovery Trust announced plans to distribute $2.2 billion to creditors as part of its fourth payout under the exchange's Chapter 11 plan, aiming to recover assets for users of the failed crypto trading platform that collapsed in November 2022.