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 comprising seized assets, as announced by the US Department of Justice on Monday. The international cryptocurrency investment scheme, which was operated by OneCoin Ltd. co-founders Ignatova and Karl Sebastian Greenwood between 2014 and 2019, defrauded up to 3.4 million investors worldwide. The scheme involved marketing and selling a fraudulent cryptocurrency through a global multi-level marketing network based in Sofia, Bulgaria.
Investors globally lost over $4 billion to the scam, which was perpetuated by promoters soliciting investments in exchange for purported tokens, despite not involving actual cryptocurrencies or existing 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 the perceived value of OneCoin by automatically generating new coins. Following the collapse, the DOJ has been working to seize assets, with a $5 million reward offered for the missing 'Cryptqueen' in June 2024. Greenwood admitted 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, costing victims 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 a $2.2 billion distribution to creditors as part of its Chapter 11 plan, which aims to recover assets for users of the crypto trading platform that collapsed in November 2022, triggering a crypto bear market.