More than a decade after the OneCoin scam began, victims of the $4 billion cryptocurrency fraud scheme are now eligible for compensation through a $40 million fund of seized assets, as announced by the US Department of Justice on Monday. The scheme, which operated from 2014 to 2019, was led by co-founders Ignatova and Karl Sebastian Greenwood, who defrauded up to 3.4 million investors worldwide through a global multi-level-marketing network. The operation, based in Sofia, Bulgaria, marketed and sold a fake cryptocurrency, amassing over $4 billion in investments globally. However, the scheme did not involve any actual cryptocurrencies and did not exist on any blockchain.
The DOJ described the scheme as 'one of the largest global fraud schemes in history', which collapsed in 2017 after Ignatova and her team were found to have artificially inflated OneCoin's value. 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 cryptocurrency, resulting in losses of over $4 billion worldwide.' The DOJ has committed to continuing its efforts to seize criminal proceeds and prioritize returning funds to the victims. This development comes approximately four weeks after the FTX Recovery Trust announced its plans to distribute $2.2 billion to creditors, as part of its fourth payout under the exchange's Chapter 11 plan, which aims to recover assets for users of the defunct crypto trading platform that collapsed in November 2022.