More than a decade after the OneCoin cryptocurrency scam commenced, victims can now apply for compensation from a $40 million fund comprising seized assets, as announced by the US Department of Justice on Monday. Between 2014 and 2019, co-founders Ignatova and Karl Sebastian Greenwood, along with others, orchestrated a global cryptocurrency investment scheme that defrauded up to 3.4 million investors worldwide, according to the DOJ. The scheme, which was operated from Sofia, Bulgaria, involved marketing and selling a fraudulent cryptocurrency through a global multi-level-marketing network. Investors globally lost over $4 billion to the fake cryptocurrency, which was promoted by a network of solicitors offering purported tokens in exchange for investments, despite not being linked to any actual cryptocurrency or blockchain.
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 automatically generating new coins. Following the collapse, 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 for victims.' Clayton also stated that the DOJ will continue to seize criminal proceeds and prioritize reimbursing victims.
The compensation process for OneCoin victims comes approximately four weeks after the FTX Recovery Trust announced plans to distribute $2.2 billion to creditors in its fourth payout under the exchange's Chapter 11 plan, with earlier rounds totaling over $6 billion as part of efforts to recover assets for users of the crypto trading platform, which collapsed in November 2022 and triggered a significant crypto bear market.