More than a decade after the initiation of the OneCoin scam, victims of the $4 billion cryptocurrency fraud scheme are now eligible for compensation from a $40 million fund comprised of seized assets, as announced by the US Department of Justice. The scheme, which was operated by OneCoin Ltd.
co-founders Ignatova and Karl Sebastian Greenwood between 2014 and 2019, deceived up to 3.4 million investors worldwide. The fraudulent cryptocurrency was marketed and sold through a global multi-level-marketing network, with victims investing over $4 billion globally. Notably, the scheme did not involve actual cryptocurrencies and was not based on any blockchain. The operation collapsed in 2017 after it was discovered that Ignatova and her team had artificially inflated OneCoin's value by automatically generating new coins.
In 2022, Greenwood admitted to federal wire fraud and money laundering charges. According to US Attorney Jay Clayton for the Southern District of New York, 'OneCoin's founders deceived victims by selling a false promise disguised as a cryptocurrency, resulting in losses exceeding $4 billion worldwide.' The DOJ has pledged to continue seizing criminal proceeds and prioritizing the recovery of funds for victims.
This development comes approximately four weeks after the FTX Recovery Trust announced its plans to distribute $2.2 billion to creditors as part of its 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.