The U.S. Department of Justice has established a $40 million compensation fund for victims of the OneCoin $4 billion cryptocurrency fraud scheme, which was announced on Monday. Between 2014 and 2019, Ignatova and Karl Sebastian Greenwood, co-founders of OneCoin Ltd., along with others, orchestrated a global cryptocurrency investment scam that deceived up to 3.4 million investors worldwide, according to the DOJ.
The scheme, which was based in Sofia, Bulgaria, promoted and sold a fraudulent cryptocurrency through a global multi-level-marketing network. Investors from around the globe lost over $4 billion in the fraudulent cryptocurrency, which operated through a network of promoters who solicited investments in exchange for purported tokens, but notably did not involve any actual cryptocurrencies, nor did OneCoin exist on any blockchain.
The ponzi scheme, which the DOJ described as 'one of the largest global fraud schemes in history,' collapsed in 2017 after Ignatova and her team were found to have manipulated OneCoin's perceived value through the automatic generation of new coins. In June 2024, the DOJ offered a $5 million reward for the missing Cryptqueen, while Greenwood, who allegedly referred to investors as 'idiots,' pleaded guilty to federal wire fraud and money laundering charges in 2022.
According to U.S. Attorney Jay Clayton for the Southern District of New York, 'OneCoin's founders sold a lie disguised as cryptocurrency, costing victims over $4 billion worldwide.' He also stated that the DOJ will continue to seize criminal proceeds and prioritize returning money to the victims.
The compensation process for OneCoin 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 a process aimed at recovering assets for users of the once-prominent crypto trading platform, which collapsed in November 2022 and triggered a steep crypto bear market.