A $40 million compensation fund has been established from seized assets for victims of the $4 billion OneCoin cryptocurrency scam, the US Department of Justice announced. The scheme, which operated from 2014 to 2019, was led by Ignatova and Karl Sebastian Greenwood, who defrauded up to 3.4 million investors worldwide through a global multi-level marketing network. The fraudulent cryptocurrency was marketed and sold through this network, with victims investing over $4 billion globally. However, the scheme did not involve any actual cryptocurrencies and did not exist on any blockchain.
The DOJ has described it as one of the largest global fraud schemes in history. The scheme collapsed in 2017 after Ignatova and her team were found to have artificially inflated OneCoin's value. In 2022, Greenwood admitted to federal wire fraud and money laundering charges. 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 for victims worldwide.
The DOJ will continue to seize criminal proceeds and prioritize returning funds to victims. This development comes after the FTX Recovery Trust announced a $2.2 billion payout to creditors, part of a larger effort to recover assets for users of the collapsed crypto trading platform.