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 international scheme, which operated from 2014 to 2019, was led by co-founders Ignatova and Karl Sebastian Greenwood, who deceived up to 3.4 million investors worldwide through a global multi-level-marketing network. The Sofia-based operation sold a fake cryptocurrency through a network of promoters, who promised investors tokens in exchange for their investments, but in reality, did not involve any actual cryptocurrencies and was not listed on any blockchain.
The scheme, described by the DOJ as 'one of the largest global fraud schemes in history', collapsed in 2017 after it was discovered that Ignatova and her team had artificially inflated OneCoin's value by 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 deceived victims by selling a false cryptocurrency, resulting in losses of over $4 billion worldwide'. The DOJ plans to continue seizing criminal proceeds and prioritizing the return of funds to victims. This development comes approximately four weeks after the FTX Recovery Trust announced its plan to distribute $2.2 billion to creditors as part of its fourth payout under the exchange's Chapter 11 plan, which aims to recover assets for users of the crypto trading platform that collapsed in November 2022, triggering a severe crypto bear market.