In the United States, victims of the $4 billion OneCoin cryptocurrency scam are finally receiving compensation.
On April 13, the US Department of Justice announced that anyone who purchased OneCoin between 2014 and 2019 and suffered a net loss had access to assets worth $40 million.
This program marks a major milestone for OneCoin victims, most of whom have had no way to recover what they lost until now. Victims in the UK brought a class action lawsuit in 2024, but this did not happen fell apart when funding for court proceedings ended.
Few crypto programs have been as renowned as OneCoin in terms of scale and the international intrigue that followed. Founders and associates have been imprisoned or killed, while the leader remains at gigantic.
The Wild West of early cryptocurrencies was often defined by schemes and eccentric characters, the effects of which in the case of OneCoin are still felt today.
Founding OneCoin and legal problems
In 2014, cryptocurrency was still a niche internet phenomenon. The Bitcoin white paper was only six years elderly, and general knowledge about cryptocurrencies and blockchain technology was constrained. Nevertheless, interest in the modern asset class among retail investors was growing.
From August to December 2014, Ruja Ignatova and Karl Sebastian Greenwood founded OneCoin. Initial promotions began in Europe, with entities soon appearing in Bulgaria, Dubai and Belize.
OneCoin’s structure was complicated. Investors had to purchase token packages that would allow them to “mine” OneCoin. There were several different entry points into the price of the packages, with almost no upper limit. The most high-priced one, according to CoinMarketCap, was 225,000 euros.
Meanwhile, promoters could earn commissions by introducing modern investors to the program. This allowed for the rapid development of the project.
Although sold as a cryptocurrency, it was not decentralized. The coin itself was hosted on the centralized servers of OneCoin Ltd. The coins were not available for public trading and owners could only trade nominal amounts in a closed system.
The project seemed a bit dodgy from the start, but the fear of missing out, as well as the huge audiences Ignatova attracted at seemingly prestigious conferences, were enough to convince many.
Throughout 2015, the project expanded around the world, in Europe, Asia, Africa and Latin America. Echoing the familiar MLM playbook, promoters emphasized the urgency and inevitability of the impending explosion in value and adoption of cryptocurrencies.
Regulators began to notice the problem in behind schedule 2015. Bulgarian Financial Supervisory Authority released warning about OneCoin, after which the company ceased all operations in the country.
By 2016, several other national financial regulators also included OneCoin on their lists. At the end of the year, research on the project was conducted by Norway, Bulgaria, Finland, Sweden and Latvia. Hungarian central bank called it’s a pyramid scheme.
In December, the Italian authorities defined OneCoin for an illegal pyramid scheme and demanded to cease operations in the country. China has started investigating the project and even arrested some investors.
In 2017, regulatory efforts intensified again. Germany, Thailand, Belize and Vietnam have issued cease and desist orders or declared OneCoin illegal. In India, the secret police arrested 18 organizers of the OneCoin event, which tried to attract modern investors. The Indian authorities went so far as to do so fee Ignatova herself in July.
By the end of the year the situation had reached a critical point. Investors were concerned about delays in the supposed exchange that would allow them to withdraw their coins. This was to be discussed at the October meeting of OneCoin organizers in Lisbon, Portugal.
But Ignatova didn’t show up. According to a BBC investigation, she boarded a Ryanair flight from Sofia to Athens, Greece on October 25, 2017. No one has seen her since then.
Arrests, murders and escape of Crypto Queen
In early 2018, investigators began working on the project. At the request of prosecutors in Germany, Bulgarian police raided the OneCoin office in Sofia. A raid that, according to the Sofia Globe, too attached German police and Europol seized servers and physical evidence.
In July, the Greenwood co-founder was arrested on money laundering and fraud charges in Thailand, where he was awaiting extradition back to the United States.
Ignatova’s lawyer, Mark S. Scott, was convicted of conspiracy to commit money laundering and conspiracy to commit bank fraud because of his connections and activities at OneCoin. A few years later, he was deprived of the right to practice his profession.
OneCoin remained in the headlines for the next few years as events continued to unfold. In July 2020, two project promoters, Oscar Brito Ibarra and Ignacio Ibarra, were kidnapped and murdered in Mexico. Local media reported that local cartels, which have become increasingly interested in cryptocurrencies, may have been involved.
In 2020, Hollywood entertainment media reported that Kate Winslet would star in a movie about OneCoin. To date, this has not happened he started production.
While the Greenwood case was pending in the United States, in June 2023, the Federal Bureau of Investigation placed Ignatova on its list of ten most wanted fugitives.
In September, Greenwood was sentenced to 20 years in prison and ordered to pay $300 million in restitution. He pleaded guilty to fraud and money laundering charges. His sentence was a marked reduction from the initial 60 years sought by prosecutors.
In 2024, the Department of Justice arrested and charged William Morro with bank fraud in connection with OneCoin. Morro moved approximately $35 million in OneCoin funds between banks in China and Hong Kong, and $6 million between Hong Kong and the US. Morro surrendered to authorities and pleaded guilty to one count of conspiracy to commit bank fraud.
In the latest news, the Department of Justice announced on Monday that $40 million in assets are available to compensate investors who purchased OneCoin between 2014 and 2019 and experienced a net loss.
Before all was said and done, approximately 3.5 million people had lost money as a result of the crypto scheme. Authorities estimate that the organizers ultimately stole $4 billion in user funds.
Ignatova remains at gigantic and is on the ten most wanted list. The FBI is there victim $5 million reward for information leading to her arrest and/or conviction.
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