The US Department of Justice has established a $40 million compensation fund for victims of the OneCoin cryptocurrency scam, which is estimated to have defrauded over 3.4 million investors of more than $4 billion between 2014 and 2019. The international scheme, led by Ignatova and Karl Sebastian Greenwood, utilized a multi-level marketing network to promote and sell the fraudulent cryptocurrency.
Despite its claims, the operation did not involve any actual cryptocurrencies and was not based on a blockchain. The scheme, described by the DOJ as one of the largest global frauds in history, collapsed in 2017 after it was discovered that the value of OneCoin was being artificially inflated through the automatic generation of new coins. In recent developments, the DOJ has offered a $5 million reward for information leading to the capture of the missing 'Cryptqueen' and Greenwood has pleaded guilty to federal wire fraud and money laundering charges.
According to US Attorney Jay Clayton, the founders of OneCoin 'sold a lie disguised as cryptocurrency, costing victims over $4 billion worldwide'. The DOJ has pledged to continue seizing criminal proceeds and prioritizing the return of funds to victims. This compensation process comes on the heels of the FTX Recovery Trust's announcement that it will distribute $2.2 billion to creditors, marking the fourth payout under the exchange's Chapter 11 plan, with previous rounds totaling over $6 billion in an effort to recover assets for users of the collapsed crypto trading platform.