More than a decade after the onset 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. The scheme, which operated between 2014 and 2019, involved co-founders Ignatova and Karl Sebastian Greenwood, along with others, who orchestrated an international cryptocurrency investment scam that deceived up to 3.4 million investors globally, according to the DOJ. Based in Sofia, Bulgaria, the operation promoted and sold a fake cryptocurrency through a global multi-level marketing network.
Worldwide, victims invested over $4 billion in the fraudulent cryptocurrency, which functioned through a network of promoters soliciting investments in exchange for supposed tokens, but notably did not involve actual cryptocurrencies, nor did OneCoin 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 OneCoin's perceived value by automatically generating new coins. Following the scheme's collapse, the DOJ has been working to seize assets, with a new $5 million reward offered in June 2024 for the missing 'Cryptqueen'. In 2022, Greenwood admitted to federal wire fraud and money laundering charges, having allegedly referred to investors as 'idiots'.
According to US Attorney Jay Clayton for the Southern District of New York, 'OneCoin's founders sold a lie disguised as cryptocurrency, costing victims more than $4 billion worldwide.' The DOJ will continue to prioritize seizing criminal proceeds and returning money 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, with earlier rounds totaling over $6 billion in an effort to recover assets for users of the once-prominent crypto trading platform that collapsed in November 2022, triggering a steep crypto bear market.