More than a decade after the OneCoin scam began, 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. The international scheme, which operated from 2014 to 2019, was led by co-founders Ignatova and Karl Sebastian Greenwood, and involved the sale of a fraudulent cryptocurrency through a global multi-level marketing network. With up to 3.4 million investors defrauded worldwide, the scheme was deemed 'one of the largest global fraud schemes in history' by the DOJ. The operation, based in Sofia, Bulgaria, did not involve actual cryptocurrencies or blockchain technology, despite claims to the contrary.
The scheme collapsed in 2017 after it was discovered that the value of OneCoin was being artificially inflated through automated coin generation. In 2022, Greenwood admitted to federal wire fraud and money laundering charges, and a $5 million reward was offered for the capture of the missing 'Cryptqueen' in June 2024.
According to US Attorney Jay Clayton, 'OneCoin's founders deceived victims by selling a false promise of cryptocurrency, resulting in losses of over $4 billion worldwide.' The DOJ will continue to work towards seizing criminal proceeds and prioritizing the return of funds to victims. This development comes on the heels of the FTX Recovery Trust's announcement to distribute $2.2 billion to creditors, as part of a broader effort to recover assets for users of the collapsed crypto trading platform, which filed for Chapter 11 in November 2022.