More than a decade after the OneCoin scam started, victims of the $4 billion fraud scheme are now eligible 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, operated a global cryptocurrency investment scheme that defrauded up to 3.4 million investors worldwide, according to the DOJ. The scheme, based in Sofia, Bulgaria, involved marketing and selling a fraudulent cryptocurrency through a global multi-level marketing network.
Investors worldwide lost over $4 billion to the fake cryptocurrency, which was promoted by a network of promoters who solicited investments in exchange for supposed tokens, but did not actually involve any cryptocurrencies or exist on a blockchain. The ponzi 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 manipulated the perceived value of OneCoin by automatically generating new coins. In June 2024, the DOJ offered a $5 million reward for 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 for victims worldwide.' Clayton also stated that the DOJ will continue to seize criminal proceeds and prioritize returning funds to victims. The compensation process for OneCoin victims comes approximately four weeks after the FTX Recovery Trust announced it would 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 that collapsed in November 2022, triggering a significant crypto bear market.