Damian Williams, United States Attorney for the Southern District of New York, announced today that KARL SEBASTIAN GREENWOOD, who co-founded OneCoin with RUJA IGNATOVA, also known as “the Cryptoqueen,” was sentenced to 20 years in prison for his orchestration of the massive fraud scheme. from OneCoin. OneCoin, which began operating in 2014 and was based in Sofia, Bulgaria, marketed and sold a fraudulent cryptocurrency with the same name through a global multi-level marketing (“MLM”) network. As a result of the misrepresentations that GREENWOOD, IGNATOVA and others made about OneCoin, millions of victims invested more than $4 billion worldwide in the fraudulent cryptocurrency. Today’s sentence was imposed by Federal District Judge Edgardo Ramos. IGNATOVA, who was added to the Federal Bureau of Investigation (“FBI”) Ten Most Wanted list in June 2022, remains at large.
U.S. Attorney Damian Williams said: “As the founder and leader of OneCoin, Karl Sebastian Greenwood operated one of the largest fraud schemes ever perpetrated. Greenwood and his co-conspirators, including fugitive Ruja Ignatova, scammed unsuspecting victims out of billions of dollars with promises of a “financial revolution” and claimed that OneCoin would be the “Bitcoin killer.” In fact, OneCoins were worthless and investors were left with nothing, while Greenwood lined his pockets with more than $300 million. We hope that this long sentence will resonate in the financial sector and deter anyone who may be tempted to lie to investors and exploit the cryptocurrency ecosystem through fraud.”
According to public court documents and statements made in court:
GREENWOOD and IGNATOVA co-founded OneCoin Ltd. (“OneCoin”) in 2014. OneCoin was headquartered in Sofia, Bulgaria. OneCoin marketed and sold a fraudulent cryptocurrency with the same name. OneCoin began operating in the United States around 2015. Between the fourth quarter of 2014 and the fourth quarter of 2016 alone, the scheme received 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 the primary global distributor of OneCoin 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 bundles. As OneCoin’s leading MLM distributor, GREENWOOD earned 5% of OneCoin’s monthly sales from anywhere in the world, which totaled over $200 million from Q4 2014 to Q4 2016 alone and exceeded approximately $300 million in total . GREENWOOD’s mastery as a marketer and use of the MLM structure helped contribute to the rapid growth and incredible success of OneCoin.
Since the inception of OneCoin, GREENWOOD and IGNATOVA used Bitcoin’s notoriety to convince investors that OneCoin was the next “can’t miss” investment opportunity. GREENWOOD and IGNATOVA wanted investors to believe that OneCoin was a legitimate cryptocurrency like Bitcoin and deliberately made the comparison between the two cryptocurrencies through their representations to investors and their marketing materials. For example, in a OneCoin PowerPoint presentation prepared by GREENWOOD, OneCoin described itself as “a unique and innovative cryptocurrency, born from the success of the pioneering and famous cryptocurrency, Bitcoin.” In another slide, OneCoin highlighted the explosive growth of Bitcoin, stating that “Bitcoins increased in value 75 times in 2013,” and including the following quote from The Guardian newspaper: “Man buys $27 worth of bitcoins, forgets he bought them, and discovers that they are now worth $886,000.”
In reality, unlike legitimate cryptocurrencies, OneCoin had no real value and was conceived as a fraud by GREENWOOD and IGNATOVA from day one. The misrepresentations made by GREENWOOD and others to OneCoin investors were countless and the cryptocurrency was worthless. Among other things, OneCoin lied to its members about how their cryptocurrency was valued, claiming that OneCoin’s price was based on market supply and demand, when in fact OneCoin itself arbitrarily set the coin’s value without taking into account market forces. The assumed value of a OneCoin grew steadily from €0.50 to approximately €29.95 per coin, in or around January 2019. The supposed price of OneCoins never decreased in value.
GREENWOOD also lied to investors about the usefulness of the tokens included in the trading packages, claiming that they could be used to secure positions in OneCoin “mining pools”, represented in promotional materials as computer hardware used to “mine” OneCoins. But there were no mining pools or computers to mine OneCoin either. GREENWOOD knew that this lie was essential to convince investors that OneCoin was a legitimate cryptocurrency. As he wrote in an email to IGNATOVA, “
OneCoin also claimed to have a private “blockchain” or digital ledger that identifies OneCoins and records historical transactions. But in reality, OneCoin lacked a true blockchain, that is, a public and verifiable blockchain. In fact, around March 2015, GREENWOOD and IGNATOVA had begun allocating members to OneCoins that did not even exist on the supposedly private OneCoin blockchain, referring to these coins as “fake coins.” At least in June 2015, GREENWOOD and IGNATOVA began emailing each other with models tabulating current and projected future trading pack sales volumes along with pending tokens and OneCoins. The spreadsheets identified separate lines for “mined coins,” “mined (real) coins,” and “fake coins.” References to “fake coins” in those records referred to OneCoins that had been distributed to members but did not exist on the OneCoin “blockchain.” Two months later, in August 2015, IGNATOVA wrote to GREENWOOD, in an email with the subject line: “I’m afraid this is a problem,” “This is the implication of the big sales from 4 weeks ago. 1.3 (million million) counterfeit coins. “We are screwed, this was unexpected and now we need to seriously think about it.”
On July 4, 2015, IGNATOVA announced the official opening of the US market for OneCoin during an online webinar. During the webinar, IGNATOVA said, among other things: “(I)f we want to go and capture Bitcoin, we will never be able to do it without being strong in the US and without being part of the community. So this is why I’m so excited about the US as a market. It’s something that has to do with prestige. It is a huge market. And I think it is a place of innovation, of Wall Street, a place where we have to be if we want to be great.”
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 to the scheme, money that GREENWOOD, IGNATOVA, and others used to fund extravagant lifestyles. As OneCoin’s top MLM distributor, GREENWOOD earned over $300 million during the scheme, much of which he spent on his lavish lifestyle. For example, in or around December 2015, GREENWOOD used approximately $10,000 in fraud proceeds to stay at an exclusive five-star resort in Brazil. Later that month, GREENWOOD used an additional $21,000 in fraud proceeds to stay at a luxury beach-view villa in Koh Samui, Thailand. Later, when GREENWOOD traveled to Barcelona in May 2016, he used investor funds to stay at another five-star luxury hotel and rented a Range Rover during his trip.
GREENWOOD also used proceeds from the scheme to purchase luxury designer clothing, footwear and watches totaling approximately $2 million; pay an advance payment of approximately £475,000 for a Sunseeker yacht; and to purchase real estate properties in several countries, including Spain, Dubai and Thailand. Finally, GREENWOOD used investor funds to travel around the world on a private “OneCoin” plane and posted promotional videos of his trip online.
GREENWOOD was arrested at his residence on the island of Koh Samui, Thailand, in July 2018 and extradited to the United States to face fraud and money laundering charges in October 2018. GREENWOOD has been detained since his arrest in July 2018. .
On October 12, 2017, IGNATOVA was charged with fraud and money laundering related to OneCoin in the United States District Court for the Southern District of New York, and a federal warrant was issued for her arrest. On October 25, 2017, IGNATOVA traveled on a commercial flight from Sofia, Bulgaria, to Athens, Greece, and has not been seen publicly since. IGNATOVA was added to the FBI’s Ten Most Wanted list in June 2022. The FBI is offering a $100,000 reward for information leading to IGNATOVA’s arrest.
* * *
In addition to his prison sentence, GREENWOOD, 46, a citizen of Sweden and the United Kingdom, was ordered to pay approximately $300 million in forfeiture.
Mr. Williams praised the excellent investigative work of the Internal Revenue Service-Criminal Investigation and the FBI, who conducted this investigation in conjunction with special agents from the United States Attorney’s Office. Mr. Williams also thanked the New York County District Attorney’s Office for their assistance throughout the investigation. Mr. Williams further thanked Thai authorities, including the Royal Thai Police and the Attorney General’s Office, for their assistance in the arrest and extradition of GREENWOOD. The Department of Justice’s Office of International Affairs worked with law enforcement partners in Thailand to secure the arrest and extradition of GREENWOOD.
If you have any information about IGNATOVA’s whereabouts, please contact your local FBI office or the nearest US embassy or consulate. Tips can be reported anonymously and can also be reported online at tips.fbi.gov.
The case is being prosecuted by the Bureau’s Complex Fraud and Cybercrime Unit. Assistant United States Attorneys Nicholas Folly, Juliana N. Murray and Kevin Mead are prosecuting the case.