More than a decade after the OneCoin scam began, victims of the $4 billion cryptocurrency fraud can now apply for compensation from a $40 million fund of seized assets, as announced by the US Department of Justice on Monday. The international scheme, which operated from 2014 to 2019, was led by co-founders Ignatova and Karl Sebastian Greenwood, who defrauded up to 3.4 million investors worldwide through a global multi-level-marketing network. The operation, based in Sofia, Bulgaria, sold a fraudulent cryptocurrency through a network of promoters, who promised investments in return for tokens, but did not actually involve any cryptocurrencies or blockchain technology. 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 artificially inflated the value of OneCoin by automatically generating new coins.
In June 2024, the DOJ offered a $5 million reward for information leading to the capture of the missing 'Cryptqueen'. Greenwood, who allegedly referred to investors as 'idiots', pleaded guilty 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 false promise disguised as cryptocurrency, resulting in losses of over $4 billion worldwide for victims.' The DOJ has stated that it will continue to work 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 in its fourth payout under the exchange's Chapter 11 plan, following earlier rounds that totalled over $6 billion as part of efforts to recover assets for users of the crypto trading platform, which collapsed in November 2022 and triggered a significant crypto bear market.