OneCoin Scam Victims Receive $40 Million in Seized Assets Over a Decade After the Scheme Began

Those affected by the $4 billion OneCoin fraud can now apply for compensation from a $40 million fund comprising seized assets, as announced by the US Department of Justice on Monday. Between 2014 and 2019, co-founders Ignatova and Karl Sebastian Greenwood, along with others, ran an international cryptocurrency investment scam that deceived up to 3.4 million investors globally, according to the DOJ. The scheme, operated from Sofia, Bulgaria, involved marketing and selling a fake cryptocurrency through a global multi-level marketing network. Worldwide, victims invested over $4 billion in the fraudulent cryptocurrency, which was promoted by a network of solicitors offering investments in exchange for supposed tokens, but notably, it did not involve actual cryptocurrencies and did not exist on any blockchain.

The ponzi 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 manipulated the perceived value of OneCoin by automatically generating new coins. In June 2024, the DOJ offered a $5 million reward for information on 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 for victims worldwide.' Clayton also stated that the DOJ would continue to seize criminal proceeds and prioritize returning funds to the victims. The compensation process for OneCoin victims comes approximately four weeks after the FTX Recovery Trust announced it would distribute $2.2 billion to creditors in its fourth payout under the exchange's Chapter 11 plan, with earlier rounds totaling over $6 billion as part of efforts to recover assets for users of the once-prominent crypto trading platform, which collapsed in November 2022 and triggered a steep crypto bear market.