Damian Williams, United States Attorney for the Southern District of New York, announced today that KARL SEBASTIAN GREENWOOD, co-founder of OneCoin with RUJA IGNATOVA, aka “the Cryptoqueen,” was sentenced to 20 years in prison for his orchestration of the fraud scheme massive OneCoin. OneCoin, which began operations in 2014 and was based in Sofia, Bulgaria, marketed and sold a fraudulent cryptocurrency of the same name through a global multi-level marketing (“MLM”) network. As a result of false claims made by GREENWOOD, IGNATOVA and others about OneCoin, millions of victims have invested more than $4 billion globally in the fraudulent cryptocurrency. Today’s sentence was imposed by U.S. 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 fraudulent schemes ever perpetrated. Greenwood and his co-conspirators, including fugitive Ruja Ignatova, defrauded unsuspecting victims out of billions of dollars by promising a “financial revolution” and claiming OneCoin would be the “Bitcoin Killer.” In fact, the OneCoins were worth absolutely nothing and investors were left with nothing, while Greenwood lined his pockets with over $300 million. We hope that this long sentence will resonate in the financial sector and deter anyone who might be tempted to lie to investors and exploit the cryptocurrency ecosystem through fraud.
According to public court records and statements made in court:
GREENWOOD and IGNATOVA co-founded OneCoin Ltd. (“OneCoin”) in 2014. OneCoin was based in Sofia, Bulgaria. OneCoin marketed and sold a fraudulent cryptocurrency of 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 raked in over $4 billion from at least 3.5 million victims.
OneCoin marketed its fake cryptocurrency through a global MLM network of OneCoin members. GREENWOOD engineered OneCoin’s use of an MLM structure and was OneCoin’s primary global distributor and 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 OneCoin’s first MLM distributor, GREENWOOD accounted for 5% of OneCoin’s monthly sales worldwide, which totaled over $200 million from Q4 2014 to Q4 2016 alone and exceeded approximately $300 million in total. GREENWOOD’s mastery as a seller and use of the MLM structure has contributed to OneCoin’s rapid growth and incredible success.
From the inception of OneCoin, GREENWOOD and IGNATOVA used Bitcoin’s notoriety to convince investors that OneCoin was the next investment opportunity not to be missed. GREENWOOD and IGNATOVA wanted investors to believe that OneCoin was a legitimate cryptocurrency like Bitcoin and deliberately drew a comparison between the two cryptocurrencies through their representations to investors and marketing materials. For example, in a OneCoin PowerPoint presentation prepared by GREENWOOD, OneCoin describes 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 Bitcoin, forgets that he had purchased and discovered that they are now worth $886,000.
In reality, unlike legitimate cryptocurrencies, OneCoin had no real value and was designed by GREENWOOD and IGNATOVA to be a fraud from day one. The false statements 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 OneCoin’s price was based on market supply and demand, when in fact OneCoin itself was arbitrarily setting the value of the coin without taking into account market forces. The presumed value of a OneCoin increased steadily, from €0.50 to approximately €29.95 per coin, around January 2019. The presumed value of OneCoin never decreased.
GREENWOOD also lied to investors about the usefulness of the tokens included in traders’ packages, claiming that they could be used to secure positions in OneCoin’s “mining pools”, described in promotional materials as hardware used to “mine” OneCoins. But there were also no mining pools or computers to mine OneCoin. GREENWOOD knew that this lie was key to convincing investors that OneCoin was a legitimate cryptocurrency. As he wrote in an email to IGNATOVA, “the concept of converting tokens into OneCoin is an important phase for the validity and truth behind OneCoin. So-called coin “mining” is a very familiar concept in the industry and a story we can sell to members. However, as GREENWOOD and IGNATOVA both knew, OneCoin was “not actually mining, but talking bullshit to people.” In the same email exchange, GREENWOOD asked IGNATOVA: “How can we investigate and find out about this? and “Can any member (trying to be smart) figure out that we are not investing in mining machines, but just software that does this for us?”
OneCoin also claimed to have a private “blockchain” or digital ledger identifying OneCoins and recording transaction history. But in reality, OneCoin lacked a real blockchain, that is, a public and verifiable blockchain. Indeed, around March 2015, GREENWOOD and IGNATOVA had started awarding their members OneCoins that did not even exist in the so-called private OneCoin blockchain, calling them “fake coins”. At least in June 2015, GREENWOOD and IGNATOVA began emailing each other templates listing current and future merchant package sales volumes, as well as tokens and OneCoins in circulation. The spreadsheets identified separate rows for “mined coins,” “mined (real) coins,” and “fake coins.” References to “fake coins” in these recordings 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”, “It’s the involvement of big sales of 4 weeks ago. 1.3 (billion) fake coins. We are screwed, this happened unexpectedly and now requires some serious, serious thinking.
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: “(If) we want to go catch Bitcoin, we will never be able to do it without being strong in the United States and without being part of the community. So, that’s actually why I’m so excited about the US market. It’s something that comes down to prestige. It’s a huge market. And, uh, it’s, I think, a place of innovation, of Wall Street, a place we need to be if we want to be great.
Many victims in the United States have 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 lifestyles extravagant. As OneCoin’s primary MLM distributor, GREENWOOD has earned over $300 million from this program, much of which he spent on his own lavish lifestyle. For example, 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 visited Barcelona in May 2016, he used investor funds to stay at another five-star luxury hotel and rented a Range Rover for the duration of his trip.
GREENWOOD also used proceeds from the program to purchase luxury designer clothing, shoes and watches totaling approximately $2 million; put down a deposit of around £475,000 for a Sunseeker yacht; and purchase real estate properties in various 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 its 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 U.S. 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.
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In addition to his prison sentence, GREENWOOD, 46, a Swedish and British citizen, was ordered to pay approximately $300 million in forfeiture.
Mr. Williams praised the exceptional investigative work of the Internal Revenue Service-Criminal Investigation and the FBI, who conducted this investigation jointly with special agents from the U.S. Attorney’s Office. Mr. Williams also thanked the New York County District Attorney’s Office for its 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 on the whereabouts of IGNATOVA, please contact your local FBI office or the nearest U.S. 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.
