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, according to a recent announcement by the US Department of Justice. Between 2014 and 2019, the co-founders of OneCoin, Ignatova and Karl Sebastian Greenwood, along with other individuals, orchestrated a global cryptocurrency investment scam that defrauded up to 3.4 million investors worldwide, as stated by the DOJ. The scheme, which was based in Sofia, Bulgaria, involved the sale of a fraudulent cryptocurrency through a global multi-level marketing network.
Investors from around the world lost over $4 billion to the scam, which operated by promising tokens to investors 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. In June 2024, the DOJ offered a $5 million reward for information leading to the capture of the missing Cryptqueen. 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 a cryptocurrency, resulting in losses of over $4 billion worldwide for victims." The DOJ will continue to work towards seizing criminal proceeds and prioritizing the return of funds to victims. The compensation process for OneCoin victims comes approximately four weeks after the FTX Recovery Trust announced it would distribute $2.2 billion to creditors in its fourth payout under the exchange's Chapter 11 plan. Previous rounds totalled more than $6 billion as part of a process aimed at recovering assets for users of the once-prominent crypto trading platform, which collapsed in November 2022 and triggered a significant crypto bear market.