More than a decade after the OneCoin scam was initiated, victims of the $4 billion fraud scheme are now eligible to receive compensation from a $40 million fund comprising seized assets, as announced by the US Department of Justice on Monday. Between 2014 and 2019, Ignatova and Karl Sebastian Greenwood, co-founders of OneCoin Ltd, along with other individuals, operated a global cryptocurrency investment scheme that deceived up to 3.4 million investors worldwide, according to the DOJ. The scheme, which was based in Sofia, Bulgaria, involved the marketing and sale of a fraudulent cryptocurrency through a multinational multi-level-marketing network.
Investors from around the globe invested over $4 billion in the fake cryptocurrency, which operated through a network of promoters offering investments in exchange for supposed tokens, but notably did not involve any actual cryptocurrencies, nor was OneCoin listed on any 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 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 false narrative disguised as a 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 the victims.
The compensation process for OneCoin victims comes approximately four weeks after the FTX Recovery Trust announced its plan to distribute $2.2 billion to creditors in its fourth payout under the exchange's Chapter 11 plan. Previous rounds totalled more than $6 billion as part of a process aimed at recovering assets for users of the once-prominent crypto trading platform, which collapsed in November 2022 and triggered a steep crypto bear market.