A $40 million compensation fund, comprised of seized assets, has been established for victims of the $4 billion OneCoin cryptocurrency scam, as announced by the US Department of Justice. The international scheme, which operated from 2014 to 2019, was led by co-founders Ignatova and Karl Sebastian Greenwood, and involved the fraudulent marketing and sale of a cryptocurrency through a global multi-level marketing network. With up to 3.4 million investors defrauded worldwide, the scheme resulted in losses exceeding $4 billion.
The operation, which was based in Sofia, Bulgaria, did not actually involve any real cryptocurrency or blockchain, but instead relied on the automatic generation of new coins to artificially inflate the perceived value of OneCoin. Following the collapse of the scheme in 2017, the DOJ has been working to seize assets and bring those responsible to justice.
In a statement, US Attorney Jay Clayton emphasized the DOJ's commitment to recovering proceeds from the scam and returning them to the victims. The establishment of this compensation fund comes as part of a broader effort to support victims of cryptocurrency-related fraud, with other recent initiatives including the distribution of $2.2 billion to creditors of the FTX exchange.