The U.S. Department of Justice has established a $40 million compensation fund for victims of the $4 billion OneCoin scam, which was announced on Monday. The scheme, which operated from 2014 to 2019, was led by co-founders Ignatova and Karl Sebastian Greenwood, and involved an international cryptocurrency investment scam that deceived up to 3.4 million investors worldwide. OneCoin Ltd., based in Sofia, Bulgaria, marketed and sold a fake cryptocurrency through a global multi-level marketing network.
Investors from around the globe lost over $4 billion to the scam, which did not actually involve any cryptocurrencies and was not listed on any blockchain. The scheme collapsed in 2017 after it was discovered that Ignatova and her team had artificially inflated the value of OneCoin by generating new coins.
In 2022, Greenwood pleaded guilty to federal wire fraud and money laundering charges, and in June 2024, the DOJ offered a $5 million reward for information leading to the capture of the missing 'Cryptqueen.' According to U.S. Attorney Jay Clayton for the Southern District of New York, 'The founders of OneCoin sold a false promise disguised as a cryptocurrency, causing losses of over $4 billion worldwide.' Clayton also stated that the DOJ will continue to seize criminal proceeds and prioritize returning funds to 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 crypto trading platform that collapsed in November 2022.