More than a decade after the inception of the OneCoin scam, victims of the $4 billion cryptocurrency fraud scheme 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, operated a global cryptocurrency investment scheme through OneCoin Ltd., defrauding up to 3.4 million investors worldwide. The scheme involved the sale of a fraudulent cryptocurrency, OneCoin, via a global multi-level marketing network. Investors from around the globe invested over $4 billion in this sham cryptocurrency, which was promoted by a network of solicitors who offered purported tokens in return for investments, despite the fact that the scheme did not actually involve any cryptocurrencies and was not listed on any blockchain.
The Ponzi scheme, described by the DOJ as 'one of the largest global fraud schemes in history,' collapsed in 2017 after it was discovered that Ignatova and her team had manipulated the perceived value of OneCoin through the automatic generation of new coins. Following the collapse, in June 2024, the DOJ offered a $5 million reward 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 lie disguised as cryptocurrency, resulting in losses of over $4 billion worldwide for victims.' Clayton also stated that the DOJ will continue to work towards seizing criminal proceeds and prioritizing the return of funds to victims. This development comes approximately four weeks after the FTX Recovery Trust announced its plan 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, triggering a severe crypto bear market.