The US Department of Justice has established a $40 million compensation fund for victims of the $4 billion OneCoin cryptocurrency scam, which was announced on Monday. Between 2014 and 2019, OneCoin's founders, Ignatova and Karl Sebastian Greenwood, orchestrated a global cryptocurrency investment scheme that defrauded approximately 3.4 million investors worldwide, according to the DOJ. The Bulgaria-based operation used a multi-level marketing network to sell a fraudulent cryptocurrency called OneCoin. Investors from around the globe lost over $4 billion in the scheme, which was operated by a network of promoters who promised tokens in exchange for investments, but did not involve any actual cryptocurrencies or blockchain technology.
The scheme, described by the DOJ as 'one of the largest global fraud schemes in history,' collapsed in 2017 after Ignatova and her team were found to have artificially inflated OneCoin's value by 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.' The DOJ will continue to seize criminal proceeds and prioritize returning 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, which aims to recover assets for users of the now-defunct crypto trading platform that collapsed in November 2022.