More than a decade after the OneCoin scam began, victims of the $4 billion cryptocurrency fraud scheme can now apply for compensation from a $40 million fund of seized assets, as announced by the US Department of Justice. The scheme, which operated from 2014 to 2019, involved co-founders Ignatova and Karl Sebastian Greenwood, who defrauded up to 3.4 million investors worldwide through a global multi-level-marketing network.
The Bulgaria-based operation sold a fake cryptocurrency through a network of promoters who promised tokens in exchange for investments, but the operation did not involve any actual cryptocurrencies and was not listed on any blockchain. The scheme collapsed in 2017 after it was discovered that the founders had manipulated the perceived value of OneCoin by automatically generating new coins.
The DOJ has described the scheme as 'one of the largest global fraud schemes in history.' In June 2024, a $5 million reward was offered 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 a cryptocurrency, resulting in losses of over $4 billion worldwide.' The DOJ will continue to work to seize criminal proceeds and prioritize returning funds to the victims. This development 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, with previous rounds totaling over $6 billion in an effort to recover assets for users of the crypto trading platform that collapsed in November 2022.