OneCoin co-founder sentenced to 20 years in prison
Karl Sebastian Greenwood, who co-founded OneCoin with Ruja Ignatova, a/k/a “the Cryptoqueen,” was sentenced to 20 years in prison for his orchestration of the massive OneCoin fraud scheme.
OneCoin, which began operations in 2014 and was based in Sofia, Bulgaria, marketed and sold a fraudulent cryptocurrency by the same name through a global multi-level-marketing (MLM) network.
As a result of misrepresentations that Greenwood, Ignatova, and others made about OneCoin, millions of victims invested over $4 billion worldwide in the fraudulent cryptocurrency. Between the fourth quarter of 2014 and the fourth quarter of 2016 alone, the scheme took in more than $4 billion from at least 3.5 million victims.
OneCoin marketed its fake cryptocurrency through a global MLM network of OneCoin members. Greenwood conceived of OneCoin’s use of an MLM structure and was OneCoin’s global master distributor and the leader of the MLM network through which the fraudulent cryptocurrency was marketed and sold.
Through the MLM structure, OneCoin members received commissions for recruiting others to purchase cryptocurrency packages. As the top MLM distributor of OneCoin, Greenwood earned 5% of monthly OneCoin sales from anywhere in the world, which totaled more than $200 million from the fourth quarter of 2014 through the fourth quarter of 2016 alone and exceeded approximately $300 million in total.
Unlike legitimate cryptocurrencies, OneCoin had no actual value and was conceived of by Greenwood and Ignatova as a fraud from day one. The misrepresentations made by Greenwood and others to OneCoin investors were legion, and the cryptocurrency was worthless. Among other things, OneCoin lied to its members about how its cryptocurrency was valued, claiming that the price of OneCoin was based on market supply and demand, when in fact OneCoin itself arbitrarily set the value of the coin without regard to market forces.
The purported value of a OneCoin grew steadily from €0.50 to approximately €29.95 per coin, as of in or about January 2019. The purported price of OneCoins never decreased in value.
Greenwood also lied to investors about the utility of the tokens included in trader packages, claiming that they could be used to secure positions in OneCoin’s “mining pools,” depicted in promotional materials as computer hardware used to “mine” OneCoins. But there were no mining pools and no computers to mine OneCoin either.
Greenwood wrote in an email to Ignatova, “[t]he concept of converting tokens into OneCoin is an important phase for validity and truth behind the OneCoin. The so called ‘mining’ of coins is a concept that is very familiar in the industry and a story we can sell to the members.” OneCoin was “not mining actually—but telling people shit.”
OneCoin also claimed to have a private “blockchain,” or a digital ledger identifying OneCoins and recording historical transactions. But, in reality, OneCoin lacked a true blockchain — that is, a public and verifiable blockchain.
Many victims in the United States invested in fraudulent OneCoin cryptocurrency packages, including residents of the Southern District of New York. In total, more than 3.5 million victims invested in OneCoin and lost more than $4 billion dollars from the scheme —money that Greenwood and Ignatova used to fund extravagant lifestyles.
As the top MLM distributor of OneCoin, Greenwood earned more than $300 million during the scheme, much of which he spent on his own lavish lifestyle.
Greenwood was arrested at his residence on the island of Koh Samui, Thailand, in July 2018 and was extradited to the United States to face fraud and money laundering charges in October 2018.
In addition to his prison term, Greenwood, 46, a citizen of Sweden and the United Kingdom, was ordered to pay approximately $300 million in forfeiture.