Karl Sebastian Greenwood, co-founder of the $4 billion OneCoin pyramid scheme, was sentenced to 20 years in prison on Tuesday for his involvement in one of the largest recorded criminal frauds involving cryptocurrency. The sentencing marks a significant chapter in the OneCoin case, which has impacted at least 3.5 million victims globally and set the stage for a broader crackdown on crime in the cryptocurrency markets.
Greenwood, a former employee of KPMG in Germany, pleaded guilty last December to creating and promoting a fake cryptocurrency. He was arrested in Thailand in 2018 and extradited to the U.S. to face fraud and money laundering charges. The Swedish citizen could have faced up to 60 years behind bars.
Greenwood was a close associate of Ruja Ignatova, also known as the "Cryptoqueen", who masterminded OneCoin and remains at large. Ignatova disappeared in 2017 as OneCoin came under scrutiny and is still missing. She faces a 2019 U.S. indictment charging her with fraud and money laundering and is on the FBI’s Ten Most Wanted list.
Authorities have described OneCoin as one of history's largest pyramid schemes. The fraudulent operation generated €4 billion ($4.3 billion) in revenue and €2.7 billion ($2.93 billion) in profits between 2014 and 2016 through a multilevel marketing network that paid commissions to millions worldwide for recruiting others to buy OneCoin packages.
Despite having no real value, Greenwood marketed OneCoin as competition to Bitcoin, luring victims into the multi-level marketing scam with promises of a "financial revolution". The government reported that Greenwood personally made $300 million from the fraud, some of which he spent on properties in Spain, Dubai and Thailand, luxury travel on a private OneCoin jet, designer clothes and a down payment on a Sunseeker yacht.
The case, U.S. v. Greenwood, 17-cr-00630, was held in the U.S. District Court, Southern District of New York (Manhattan). Prosecutors have stated that most OneCoin victims are unlikely to recover their investments, contrary to investors in Bernard Madoff’s record $20 billion Ponzi scheme.
OneCoin, based in Sofia, Bulgaria, primarily targeted financially unsophisticated individuals worldwide. One victim in Uganda reportedly sold his three goats to invest in the scheme. The operation used a network of money launderers who moved cash through banks in at least 21 countries.
Mark Scott, a former partner in the law firm Locke Lord LLP, was convicted after a trial in 2019 of laundering $400 million in OneCoin proceeds. Prosecutors claimed Scott set up a fake investment fund to process money from Ignatova. His sentencing is pending.
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