- Karl Greenwood, one of the founders of the OneCoin pyramid scheme, has been sentenced to 20 years in prison.
- U.S. District Judge Edgardo Ramos also ordered him to return the $300 million profit he made from the scheme.
Co-Founder of Pyramid Scheme, OneCoin, Faces 20-year Prison Sentence
On Tuesday, U.S. District Judge in Manhattan, Edgardo Ramos, sentenced Karl Sebastian Greenwood, the Co-founder and global master distributor of OneCoin, to 20 years in prison.
Karl Greenwood pleaded guilty to fraud and money laundering charges in December 2022, two years after he was extradited to the United States from Thailand.
He was also ordered by the court to relinquish the $300 million he made from the scheme.
OneCoin, A Pyramid Scheme
Greenwood co-founded OneCoin, a pyramid scheme that defrauded 3.5 million victims of over $4 billion. In 2014, OneCoin launched its pyramid scheme in Bulgaria, posing as a cryptocurrency. The scheme executives told investors the token had real-world value and could be mined. However, OneCoin did not exist on the blockchain; instead, it was a fraudulent scheme that rewarded investors when they brought in participants.
“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,” the court filing reads.
Greenwood and Ignatova exploited Bitcoin’s influence to market their non-existent token. They made deliberate comparisons between Bitcoin and OneCoin and marketed the scheme as a cryptocurrency inspired by the growth and success of Bitcoin.
The founders of the fraudulent cryptocurrency made multiple misrepresentations to investors, including owning a private blockchain.
“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,” the court filing reads.
As reported by the attorney’s office, Greenwood’s role in the pyramid scheme was beyond his position as a co-founder. He was also the global master distributor and leader of the multi-level marketing (MLM) channel in which the fraudulent crypto was marketed. He earned 5% of the monthly sales of OneCoin globally.
Greenwood co-founded OneCoin with Ruja Ignatova, known as “Crypto Queen”. Her name was on the FBI’s top ten most wanted list last year. Prosecutors said she remains at large.
In 2017, Ruja Ignatova was charged with OneCoin-related fraud and monetary charges, and a warrant was issued for her arrest. She traveled to Greece and has not been seen since then.
Greenwood was arrested in 2018 and was extradited to the U.S. from Thailand. He was detained in the United States on arrival and pleaded guilty to fraud and monetary charges last December.
Although prosecutors sought a 30-year prison sentence for the co-founder of the scheme, he was sentenced to 20 years for his financial crimes.