More than a decade after the OneCoin scam began, victims of the $4 billion cryptocurrency fraud scheme can now apply for compensation from a $40 million fund of seized assets, as announced by the US Department of Justice on Monday. The scheme, which operated between 2014 and 2019, was run by co-founders Ignatova and Karl Sebastian Greenwood, and involved the 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, with total investments exceeding $4 billion. Notably, the scheme did not actually involve any cryptocurrencies and OneCoin was not listed on any blockchain.
The scheme collapsed in 2017 after it was discovered that Ignatova and her team had artificially inflated the value of OneCoin 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 has stated that it will continue to pursue the seizure of criminal proceeds and prioritize returning funds to the 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, with previous rounds totaling over $6 billion in an effort to recover assets for users of the collapsed crypto trading platform.