More than a decade after the inception of the OneCoin scam, victims of the $4 billion fraud scheme are now eligible 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 other individuals, orchestrated an international cryptocurrency investment scam that deceived up to 3.4 million investors globally, according to the DOJ.
The scheme, which was based in Sofia, Bulgaria, involved the marketing and sale of a fraudulent cryptocurrency through a global multi-level-marketing network. Worldwide, victims invested over $4 billion in the fake cryptocurrency, which operated through a network of promoters soliciting investments in exchange for purported tokens, but notably, it 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 through the automatic generation of 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 lie disguised as cryptocurrency, resulting in losses of over $4 billion worldwide for victims.' Clayton also stated that the DOJ would continue to work towards seizing criminal proceeds, prioritizing the return of funds to victims. The compensation process for OneCoin victims 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 once-prominent crypto trading platform, which collapsed in November 2022, triggering a steep crypto bear market.