Karl Sebastian Greenwood, who co-founded OneCoin with Ruja Ignatova, the so-called “Cryptoqueen,” was sentenced on September 12 to 20 years in prison for his orchestration of the massive OneCoin fraud scheme, according to a statement by Damian Williams, the United States Attorney for the Southern District of New York.
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.
The September 12 sentence was handed down by US District Judge Edgardo Ramos.
Ignatova, who was added to the Federal Bureau of Investigation’s (“FBI”) Top Ten Most Wanted List in June 2022, remains at large.
Williams said: “As a 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, conned unsuspecting victims out of billions of dollars with promises of a ‘financial revolution’ and claims that OneCoin would be the ‘Bitcoin killer.’,” William said.
In fact, OneCoins were entirely worthless, and investors were left with nothing, while Greenwood lined his own pockets with over $300 million, he said.
“We hope this lengthy sentence resonates in the financial sector and deters anyone who may be tempted to lie to investors and exploit the cryptocurrency ecosystem through fraud.”
According to public court filings and statements made in court, Greenwood and Ignatova co-founded OneCoin Ltd. in 2014.
OneCoin, based in Sofia, marketed and sold a fraudulent cryptocurrency by the same name. OneCoin began operating in the United States in or around 2015.
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. Greenwood’s mastery as a salesman and the use of the MLM structure helped contribute to OneCoin’s rapid growth and incredible success.
From OneCoin’s inception, Greenwood and Ignatova used the notoriety of Bitcoin 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 drew 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, that is born on the success of the pioneering and famous cryptocoin, Bitcoin.”
In another slide, OneCoin highlighted the explosive growth of Bitcoin, stating that “Bitcoins increased their value 75 times in 2013,” and including the following quote from The Guardian newspaper, “Man buys $27 of bitcoin, forgets that he had bought and finds that they’re now worth $886 000.”
In reality, 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 knew that this lie was essential to convincing investors that OneCoin was a legitimate cryptocurrency.
As he 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.” However, as Greenwood and Ignatova both knew, OneCoin was “not mining actually—but telling people shit.” In the same email exchange, Greenwood asked Ignatova, “how can this be investigated and found out?” and “Can any member (trying to be clever) find out that we actually are not investing in machines to mine but it is merely a piece of software doing this for us?”
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.
Indeed, by approximately March 2015, Greenwood and Ignatova had started allocating to members OneCoins that did not even exist in OneCoin’s purported private blockchain, referring to these coins as “fake coins.”
By at least June 2015, Greenwood and Ignatova began emailing one another models tabulating current and projected future trader package sales volumes along with outstanding tokens and OneCoins. The spreadsheets identified separate lines for “mined coins,” “mined coins (real),” and “fake coins.” The 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 am afraid this is an issue,” “This is the implication from the big sales 4 weeks ago. 1.3 [billion] fake coins. We are fucked, this came unexpected and now needs serious, serious thinking.”
On July 4 2015, Ignatova announced the official opening of the United States market for OneCoin during an online webinar. During the webinar, Ignatova said, among other things: “[I]f we want to go and catch Bitcoin, we never can do this without being strong in the U.S. and without being part of the community. So, um, this is actually why I am so excited about the U.S. as the market. It’s something that is about prestige. It’s a huge market. And, um, it is, I think, a place of innovation, of Wall Street, a place where we have to be if we want to be big.”
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, Ignatova, and others 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.
For example, in or around December 2015, Greenwood used approximately $10,000 of fraud proceeds to stay at an exclusive five-star resort in Brazil. Later that month, Greenwood used an additional $21,000 of fraud proceeds to stay at a luxury villa with a beach view in Koh Samui, Thailand. Later, when Greenwood traveled to Barcelona in May 2016, he used investor funds to stay at another luxury five-star hotel and rented a Range Rover for the duration of his trip.
Greenwood also used proceeds from the scheme to purchase luxury designer clothes, footwear, and watches totaling approximately $2 million; pay a down payment of approximately 475,000 British Pound Sterling for a Sunseeker yacht; and to purchase real estate properties in various countries, including in Spain, Dubai, and Thailand. Finally, Greenwood used investor funds to travel around the world on a private “OneCoin” airplane and posted promotional videos of his travel online.
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. Greenwood has been detained since his arrest in July 2018.
On October 12 2017, Ignatova was charged with OneCoin-related fraud and money laundering charges in the US District Court for the Southern District of New York, and a federal warrant was issued for her arrest. On October 25 2017, Ignatova travelled on a commercial flight from Sofia to Athens, Greece, and has not been seen publicly since.
Ignatova was added to the FBI’s Top Ten Most Wanted List in June 2022. The FBI is offering a $100 000 reward for information leading to Ignatova’s arrest.
“If you have any information about Ignatova’s whereabouts, please contact your local FBI office or the nearest American Embassy or Consulate. Tips can be reported anonymously and can also be reported online at tips.fbi.gov.”
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.
(Photo: Jason Morrison)