More than a decade after the OneCoin scam started, victims of the $4 billion cryptocurrency fraud scheme are now eligible for compensation from a $40 million fund of seized assets, according to a recent announcement by the US Department of Justice. The scheme, which operated between 2014 and 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 based in Sofia, Bulgaria.
The operation involved the sale of a fraudulent cryptocurrency, also called OneCoin, which did not actually exist on any blockchain and did not involve real cryptocurrencies. Instead, promoters solicited investments in exchange for purported tokens, with the scheme eventually collapsing in 2017 after it was discovered that OneCoin's value was being manipulated through automatic coin generation.
The DOJ has described the scheme as "one of the largest global fraud schemes in history", with victims worldwide losing over $4 billion. In June 2024, a $5 million reward was offered for information leading to the capture of the missing 'Cryptqueen'. In 2022, Greenwood pleaded guilty to federal wire fraud and money laundering charges, having previously referred to investors as "idiots".
US Attorney Jay Clayton for the Southern District of New York stated that the founders of OneCoin had "sold a lie disguised as cryptocurrency", resulting in losses of over $4 billion worldwide, and that the DOJ would continue to work towards seizing criminal proceeds and returning funds to victims. The compensation process for OneCoin victims 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.
Previous rounds have totalled over $6 billion, aiming to recover assets for users of the crypto trading platform, which collapsed in November 2022 and triggered a significant crypto bear market.