OneCoin crypto scam victims will get compensation following the $4 billion fraud, the US Department of Justice has said, but one lawyer thinks many small investors won’t get back their stolen cash.
The DOJ announced Tuesday that it had begun the remission compensation process for OneCoin investors. OneCoin was a purported crypto project that pitched itself as a Bitcoin rival but was really a pyramid scheme that defrauded investors.
While it was marketed as a cryptocurrency, OneCoin had no blockchain and relied on industry jargon to lure investors.
“It’s going to be a big job, and I feel bad for small investors who are simply probably just not going to have the English language ability or the documentation, especially with a short timeline,” an attorney for victims in the case, Jonathan Levy, told DL News.
OneCoin ran from 2014 to 2019 and was founded by Bulgarian tech entrepreneur Ruja Ignatova, also known as the CryptoQueen.
She disappeared in 2017 and rumours have since swirled that she’s dead. Others in the scam have been sentenced and had assets frozen.
The DOJ said on Tuesday that investors who bought OneCoin between 2014 and 2019 may be eligible for compensation, and pointed them to a webpage where they can make a claim. They have until June 30 to do so.
“Today’s announcement marks an important step toward returning funds to those harmed,” US Attorney for the Southern District of New York, Jay Clayton, said in a statement.
“While no recovery can fully undo the damage, our office will continue working to seize criminal proceeds and prioritize getting money back into the hands of victims.”
But the money is being returned via a remission process, which is different from a restitution process, Levy said.
With a remission process, claimants have to present evidence in order to get money back.
With previous high-profile crypto scams such as BitConnect, courts have used a restitution process to reimburse victims.
Despite the size of the OneCoin fraud — over $4 billion was lost worldwide — Levy thinks a lot of cash won’t necessarily be distributed, as claimants won’t have the necessary evidence from years ago to present.
“While you can file it online, it’s very clear the burden of proof is going to be on the claimant,” Dr. Levy said.
“I think we’ll actually see very few claims percentage-wise.”
OneCoin co-founders Ignatova and Karl Sebastian Greenwood conned investors into buying educational courses on crypto trading and investing. People were rewarded for bringing in more participants in a classic pyramid-style scheme.
