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 of seized assets, as announced by the US Department of Justice on Monday. The scheme, which was operated by OneCoin Ltd.
co-founders Ignatova and Karl Sebastian Greenwood between 2014 and 2019, defrauded up to 3.4 million investors globally. The Bulgaria-based operation used a global multi-level marketing network to sell a fraudulent cryptocurrency, amassing over $4 billion in investments worldwide. 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 had artificially inflated the 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 deceived victims by selling a false cryptocurrency, resulting in losses of over $4 billion worldwide.' The DOJ has pledged to continue seizing criminal proceeds and prioritizing restitution for 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 crypto trading platform that collapsed in November 2022, triggering a significant crypto market downturn.