More than a decade after the inception of the OneCoin scam, victims of the $4 billion cryptocurrency fraud 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 defrauded up to 3.4 million investors worldwide, according to the DOJ. The scheme, which was based in Sofia, Bulgaria, sold a fraudulent cryptocurrency through a global multi-level marketing network. Investors from around the world lost over $4 billion to the fraudulent cryptocurrency, which functioned through a network of promoters soliciting investments in exchange for 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 manipulated the perceived value of OneCoin by automatically generating new coins. 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 lie disguised as cryptocurrency, resulting in losses of over $4 billion worldwide for victims.' Clayton also stated that the DOJ will continue to seize criminal proceeds and prioritize returning funds to victims. The compensation process for OneCoin victims comes approximately four weeks after the FTX Recovery Trust announced plans to distribute $2.2 billion 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 collapsed crypto trading platform, which triggered a steep crypto bear market in November 2022.