A $40 million compensation fund has been established for victims of the $4 billion OneCoin cryptocurrency scam, the US Department of Justice announced. The scam, which operated between 2014 and 2019, involved co-founders Ignatova and Karl Sebastian Greenwood deceiving up to 3.4 million investors worldwide through a global multi-level marketing network.
The scheme, which did not involve actual cryptocurrencies or blockchain, collapsed in 2017 after it was discovered that its value was artificially inflated. The DOJ has described it as one of the largest global fraud schemes in history, with victims investing over $4 billion.
In 2022, Greenwood admitted to federal wire fraud and money laundering charges, and a $5 million reward is being offered for the missing Ignatova. The US Attorney for the Southern District of New York stated that the founders sold a false cryptocurrency, resulting in losses of over $4 billion worldwide, and the DOJ will continue to seize proceeds and prioritize victim compensation.
This development comes as the FTX Recovery Trust is distributing $2.2 billion to creditors, part of a larger effort to recover assets for users of the collapsed crypto trading platform.