Those affected by the $4 billion OneCoin fraud scheme can now apply 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 deceived 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 globally lost over $4 billion to the fake cryptocurrency, which functioned through a network of promoters soliciting investments in exchange for purported tokens, but did not involve any actual cryptocurrencies or 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 through automatic coin generation. 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 worldwide for victims.' Clayton also stated that the DOJ would continue to seize criminal proceeds and prioritize returning funds to victims.
The compensation process for OneCoin follows roughly four weeks after the FTX Recovery Trust announced a $2.2 billion distribution 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, which collapsed in November 2022 and triggered a significant crypto bear market.