More than a decade after the OneCoin scam started, victims of the $4 billion cryptocurrency fraud can now apply for compensation from a $40 million fund of seized assets, as announced by the US Department of Justice on Monday. Between 2014 and 2019, OneCoin Ltd. co-founders Ignatova and Karl Sebastian Greenwood, along with others, operated a global investment scheme that deceived up to 3.4 million investors worldwide, according to the DOJ. The scheme, based in Sofia, Bulgaria, involved marketing and selling a fake cryptocurrency through a global multi-level marketing network.
Worldwide, victims invested over $4 billion in the fraudulent cryptocurrency, which was promoted by a network of solicitors offering purported tokens, but did not involve actual cryptocurrencies or exist on any blockchain. The 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 artificially inflated OneCoin's value by automatically generating new coins. Following the collapse, in June 2024, the DOJ offered a $5 million reward for the missing 'Cryptqueen'. In 2022, Greenwood admitted to federal wire fraud and money laundering charges, having allegedly referred to investors as 'idiots'.
'OneCoin's founders deceived victims with a false promise of cryptocurrency, resulting in losses of over $4 billion globally,' said US Attorney Jay Clayton for the Southern District of New York, adding that the DOJ will continue to seize criminal proceeds and prioritize restitution for victims. This development 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 previous rounds totaling over $6 billion as part of efforts to recover assets for users of the prominent crypto trading platform that collapsed in November 2022, triggering a significant crypto bear market.