A $40 million compensation fund has been established for victims of the OneCoin cryptocurrency scam, which duped investors out of $4 billion between 2014 and 2019, according to a recent announcement by the US Department of Justice. The international scheme, led by co-founders Ruja Ignatova and Karl Sebastian Greenwood, used a multi-level marketing network to sell a fake cryptocurrency to approximately 3.4 million investors worldwide.
The operation, based in Sofia, Bulgaria, did not involve any actual cryptocurrency or blockchain, but instead relied on a network of promoters to solicit investments in exchange for supposed tokens. The scheme, described by the DOJ as one of the largest global frauds in history, collapsed in 2017 after Ignatova and her team were found to have artificially inflated the perceived value of OneCoin by generating new coins automatically.
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 Ignatova, who has been dubbed the 'Cryptqueen'. According to US Attorney Jay Clayton for the Southern District of New York, 'OneCoin's founders perpetrated a massive deception, selling a false promise of cryptocurrency and causing losses of over $4 billion worldwide.' The DOJ will continue to work towards seizing criminal proceeds and prioritizing the return of funds to victims. This development comes on the heels of the FTX Recovery Trust's announcement to distribute $2.2 billion to creditors, marking the 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.