What to know:
- The US Department of Justice has started compensating victims of the $4 billion OneCoin crypto Ponzi scheme using seized assets.
- OneCoin, launched in 2014 by Ruja Ignatova and Karl Sebastian Greenwood, collapsed after users discovered the coins had no utility and law enforcement agencies investigated.
- Ignatova is missing and on the FBI’s “Ten Most Wanted Fugitives” list, while Greenwood was sentenced to 20 years in prison for his role in the scheme.
The US Department of Justice has started a process to compensate the victims of the $4 billion crypto Ponzi scheme OneCoin using the seized assets of some of the scheme’s main operators. The Department of Justice said last Monday that more than $40 million in seized assets are ready to compensate anyone who bought OneCoin between 2014 and 2019 and suffered a net loss.
OneCoin’s Downfall: Department of Justice Steps In
OneCoin was a brainchild of Ruja Ignatova and Karl Sebastian Greenwood in Bulgaria, launched in 2014. Their intention was to beat Bitcoin in the cryptocurrency market. The coin reached the level of the second-largest cryptocurrency by market capitalization but eventually it failed when users found out that the coins had no use and law enforcement agencies worldwide started their investigations.
Those who were part of the scheme had plundered over $4 billion from about 3.5 million victims in the years 2014 to 2016 (and some estimates go as high as $19 billion in losses worldwide).
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Leading Figures
Ignatova, dubbed the “Cryptoqueen, ” has been absent since 2017 and is among the FBI’s “Ten Most Wanted Fugitives” with a huge amount of reward of $5 million for the information resulting in her arrest and conviction. Conversely, Greenwood was handed a sentence of 20 years imprisonment in September 2023 for the part that he played in the operation.
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The Process of Compensation
Jay Clayton, the new US Attorney for Manhattan, stated that the compensation process was “a major step in returning funds to the victims”. The Department of Justice believes that victims of the scheme who purchased OneCoin between 2014 and 2019 and experienced a net loss are eligible for compensation.
OneCoin crypto Ponzi scheme highlights the necessity of due diligence and regulatory oversight in the cryptocurrency sector. As the crypto industry grows, investors should be careful at all times, and the authorities should give priority to investor protection.
Also Read: U.S. Justice Department Seizes Crypto Scam Domain Linked to Southeast Asia
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