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 of seized assets, as announced by the US Department of Justice on Monday. The scheme, which operated between 2014 and 2019, involved co-founders Ignatova and Karl Sebastian Greenwood, who defrauded up to 3.4 million investors worldwide through a global multi-level-marketing network. The fraudulent cryptocurrency, marketed and sold by the Bulgaria-based OneCoin Ltd., did not actually exist on any blockchain and did not involve real cryptocurrencies. Instead, it was a Ponzi scheme that collapsed in 2017 after Ignatova and her team manipulated the perceived value of OneCoin through automatic generation of new coins.
The DOJ has described it as 'one of the largest global fraud schemes in history.' In June 2024, a $5 million reward was offered for the missing Cryptqueen, while Greenwood admitted 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, costing victims over $4 billion worldwide.' The DOJ will continue to work towards seizing criminal proceeds and prioritizing the return of money to victims.
This development comes roughly four weeks after the FTX Recovery Trust announced its plan to distribute $2.2 billion to creditors, as part of a process aimed at recovering assets for users of the crypto trading platform that collapsed in November 2022.