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 comprised of seized assets, as announced by the US Department of Justice on Monday. Between 2014 and 2019, co-founders Ruja Ignatova and Karl Sebastian Greenwood, along with others, operated a global cryptocurrency investment scheme that deceived up to 3.4 million investors worldwide. The scheme, which was based in Sofia, Bulgaria, involved the sale of a fraudulent cryptocurrency through a global multi-level marketing network.
Investors from around the globe invested over $4 billion in the fake cryptocurrency, which was promoted by a network of solicitors who promised tokens in return for investments, despite the fact that it did not actually involve any cryptocurrencies and was not listed on any blockchain. The scheme, described by the DOJ as 'one of the largest global fraud schemes in history', collapsed in 2017 after it was discovered that Ignatova and her team had manipulated the perceived value of OneCoin by automatically generating new coins. In June 2024, the DOJ offered a $5 million reward for information leading to the capture of 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 fraudulent cryptocurrency, resulting in losses of over $4 billion worldwide for victims.' The DOJ will continue to work towards seizing criminal proceeds and prioritizing the return of funds to victims. This development comes approximately four weeks after the FTX Recovery Trust announced its plans to distribute $2.2 billion to creditors as part of 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.