More than a decade after the inception of the OneCoin scam, victims of the $4 billion cryptocurrency fraud scheme are now eligible for compensation from a $40 million fund comprising seized assets, as announced by the US Department of Justice. The scheme, which operated from 2014 to 2019, was led by co-founders Ignatova and Karl Sebastian Greenwood, and involved the marketing and sale of a fraudulent cryptocurrency through a global multi-level marketing network. The operation, based in Sofia, Bulgaria, duped up to 3.4 million investors worldwide, who invested over $4 billion in the fake cryptocurrency. Notably, the scheme did not involve actual cryptocurrencies and was not listed on any blockchain.
The ponzi scheme collapsed in 2017 after it was discovered that Ignatova and her team manipulated the perceived value of OneCoin by automatically generating new coins. In 2022, Greenwood pleaded guilty to federal wire fraud and money laundering charges, and in June 2024, the DOJ offered a $5 million reward for information leading to the capture of the missing 'Cryptqueen'. According to US Attorney Jay Clayton for the Southern District of New York, 'OneCoin's founders perpetrated a massive deception, masquerading a lie as a legitimate cryptocurrency, and costing victims over $4 billion globally'.
The DOJ has pledged to continue pursuing criminal proceeds and prioritizing the restitution of funds to victims. This development comes on the heels of the FTX Recovery Trust's announcement to distribute $2.2 billion to creditors, as part of its fourth payout under the exchange's Chapter 11 plan, aimed at recovering assets for users of the collapsed crypto trading platform.