The U.S. Department of Justice (DOJ) has announced that victims of the OneCoin fraud, amounting to approximately $4 billion, can now seek compensation from a fund valued at $40 million, which consists of seized assets.
From 2014 to 2019, Ignatova and Karl Sebastian Greenwood, founders of OneCoin Ltd. (OneCoin), along with others, orchestrated an international cryptocurrency investment scheme that defrauded up to 3.4 million investors globally, according to the DOJ.
Based in Sofia, Bulgaria, the operation marketed and sold a counterfeit crypto asset using a global multi-level-marketing (MLM) network. Worldwide investments exceeded $4 billion, with victims buying purported tokens from promoters who did not actually involve any cryptocurrencies or have OneCoin listed on any blockchain.
The DOJ described this ponzi scheme as “one of the largest global fraud schemes in history,” which unraveled in 2017 following revelations that Ignatova and her team had manipulated its perceived value through automatic coin generation. Greenwood, who infamously referred to investors as “idiots,” pleaded guilty to federal wire fraud and money laundering charges in 2022.
“OneCoin’s founders sold a lie disguised as cryptocurrency, costing victims more than $4 billion worldwide,” stated U.S. Attorney Jay Clayton for the Southern District of New York. He emphasized that the DOJ will persist in seizing criminal proceeds and prioritizing restitution to victims.
This compensation initiative follows closely on the heels of the FTX Recovery Trust’s announcement four weeks prior about distributing $2.2 billion to creditors as part of its fourth payout under Chapter 11, totaling over $6 billion from previous rounds. This effort is aimed at recovering assets for users of the crypto trading platform that collapsed in November 2022, leading to a significant downturn in the crypto market.