More than a decade after the inception of the OneCoin scam, victims of the $4 billion cryptocurrency 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, operated a global cryptocurrency investment scheme through OneCoin Ltd., deceiving up to 3.4 million investors worldwide, according to the DOJ. The scheme, based in Sofia, Bulgaria, involved the marketing and sale of a fraudulent cryptocurrency via a global multi-level-marketing network.
Worldwide, victims invested over $4 billion in the fake cryptocurrency, which functioned through a network of promoters soliciting investments in exchange for purported tokens, but notably did not involve actual cryptocurrencies or exist on any blockchain. The 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 OneCoin's perceived value by automatically generating new coins.
Following the collapse, in June 2024, the DOJ offered a $5 million reward for 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 seize criminal proceeds, prioritizing the return of funds to victims. The compensation process for OneCoin victims follows roughly 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, with earlier rounds totaling over $6 billion as part of efforts to recover assets for users of the crypto trading platform, which collapsed in November 2022 and triggered a significant crypto bear market.