The US Department of Justice has established a $40 million compensation fund for victims of the $4 billion OneCoin cryptocurrency fraud, which was perpetrated between 2014 and 2019. Co-founders Ruja Ignatova and Karl Sebastian Greenwood, along with other individuals, operated the international investment scheme, deceiving up to 3.4 million investors worldwide. The scheme, which was based in Sofia, Bulgaria, involved the sale of a fraudulent cryptocurrency through a global multi-level marketing network.
Investors from around the world lost over $4 billion in the scam, which did not actually involve any cryptocurrencies and was not registered on any blockchain. The scheme collapsed in 2017 after it was discovered that Ignatova and her team had manipulated the perceived value of OneCoin by automatically generating new coins. In 2022, Greenwood pleaded guilty to federal wire fraud and money laundering charges, and in June 2024, the Department of Justice offered a $5 million reward for information leading to the capture of the missing Ignatova.
According to US Attorney Jay Clayton, the founders of OneCoin sold a false promise disguised as a cryptocurrency, resulting in losses of over $4 billion worldwide. The Department of Justice will continue to work to seize criminal proceeds and prioritize returning funds to the victims.
This development comes approximately four weeks after the FTX Recovery Trust announced plans 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 collapsed crypto trading platform.