Massive Crypto Scam OneCoin Co-Founder Bags 20 Years in Jail

Updated: 14 September 2023

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On Tuesday, Karl Greenwood, the 46-year-old co-founder behind OneCoin—a notorious cryptocurrency pyramid scheme—was handed a 20-year prison sentence. Greenwood, a key player in the multi-billion dollar scam, had previously admitted to money laundering and wire fraud in December. His accomplice, Ruja Ignatova, aka the “Cryptoqueen,” remains elusive, according to the U.S. Department of Justice.

Initiated in Bulgaria back in 2014, OneCoin swindled investors out of more than $4 billion between 2014 and 2016. According to the Department of Justice, at least 3.5 million people fell victim to the scheme, which operated through a multi-level marketing model. People were incentivized to bring others into the fold, and Greenwood, as the top distributor, pocketed over $300 million, taking a 5% cut from all OneCoin sales.

The magnitude of this scam operation is on par with other great scams in the crypto world, such as the infamous Bitconnect.

The sentencing took place in a U.S. District Court in Manhattan, overseen by federal Judge Edgardo Ramos. U.S. Attorney Damian Williams expressed hope that the hefty sentence would act as a deterrent. Williams stated that:

Greenwood orchestrated one of the most massive fraudulent schemes in history. The sentence aims to serve as a warning for those contemplating exploiting the crypto world with lies and deceit.

Both Greenwood and Ignatova continuously lured investors by likening OneCoin to Bitcoin, promoting it as the next big investment opportunity in the crypto space. However, unlike legitimate cryptocurrencies, OneCoin had no intrinsic value. From its inception, the scheme was fraudulent, authorities pointed out. Greenwood and Ignatova falsely claimed that OneCoin’s worth was determined by market factors, when in reality, its value was arbitrarily set.

In 2014, a woman named Ruja Ignatova launched a fake cryptocurrency named "OneCoin". Despite the currency never existing, Ruja convinced people all over the world to invest. In 2017, after raking in $4 billion profit, she boarded a plane to Greece and hasn't been seen since. pic.twitter.com/DoJCfmy0Uj

— Brain Burster (@brainburster_in) March 15, 2023

As for the elusive Cryptoqueen, Ignatova was slapped with charges related to money laundering and fraud in October 2017. Just days after a federal warrant was issued for her arrest, she took off from Bulgaria and landed in Athens, Greece. She has since vanished from public view. The FBI has issued a reward of up to $250,000 for any information leading to her capture. It is also noted on her FBI’s Top 10 Most Wanted page that Ignatova is likely guarded by armed personnel and could have undergone physical alterations like plastic surgery to avoid detection.

Bitconnect’s cryptocurrency scam

There have been several other high profile scam projects such as the now-defunct BitConnect. This was introduced in February 2016 and used a multi-tier pyramid structure to pay investors according on how many affiliates they brought on board. By the end of 2017, BitcConnect’s own token, BCC, had a market cap of about $2.6 billion and was ranked as the eighth most valuable coin in the world.

The idea implied that there was a chance to turn $1,000 into over $30,000 in a year by promising average daily returns of around 1% or more.

When authorities found out about the scam in 2018, they forced BitConnect to shut down, which finally led to its demise. However, when investors eventually received their BCC coins back, the price of the token had dropped from its all-time high of almost $500 to less than $1.

The promoter of BitConnect located in the United States, Glenn Arcaro, pleaded guilty to conspiracy to conduct wire fraud in September 2021 and was given a 38-month prison term a year later. Prior to that, the DOJ declared in November 2021 that it would sell $56 million worth of bitcoin that had been taken from Arcoro in order to make up for the victims of the scam.

The project’s originator, Satish Kumbhani, who is currently at large, was later named in an indictment by the DOJ that was made public in February 2022. He was charged with defrauding investors out of about $2.4 billion through a Ponzi scheme.