Crypto Co-Founder Karl Greenwood Sentenced to 20 Years in Prison Over Ponzi Scheme

The co-founder of crypto OneCoin, 46-year-old Karl Greenwood, was sentenced to 20 years in prison for involvement in a massive $4 billion Ponzi scheme that stole from millions of investors worldwide.

The convict, believed to have orchestrated the multibillion-dollar multi-level marketing con, pleaded guilty in December to wire fraud and money laundering charges. Greenwood's partner, 43-year-old Ruja Ignatova, known as the "Cryptoqueen," is also on the FBI's Top 10 Most Wanted list and remains at large.

OneCoin Co-Founder Sentenced to 20 Years in Prison

In a press release, U.S. Attorney Damian Williams said that Greenwood operated one of the largest fraud schemes ever perpetrated. He added that they were hopeful that the lengthy two-decade sentence would resonate in the financial sector and deter anyone who could be tempted to lie to investors and exploit the cryptocurrency ecosystem through fraud.

The sentence against the OneCoin co-founder was imposed on him by federal Judge Edgardo Ramos in a U.S. District Court in lower Manhattan. The crypto started in Bulgaria in 2014 and took over $4 billion from at least 3.5 million people between 2014 and 2016, as per CNBC.

The scheme was marketed and sold through a multi-level marketing structure and also used to pay commissions to OneCoin members who recruited others to buy crypto packages. Greenwood was the top distributor and received 5% of all OneCoin sales, gaining over $300 million.

Greenwood and Ignatova consistently portrayed the crypto as the next Bitcoin-like investment opportunity. However, unlike legitimate cryptocurrencies, OneCoin had no actual value and was only conceived by the two fraud schemers as a fraud from the day it was created.

Greenwood and Ignatova, as well as many others, lied repeatedly to their investors, including making claims that OneCoin's value was determined by market forces when, in reality, its price was set "arbitrarily."

Massive $4 Billion Ponzi Scheme

As Ignatova's whereabouts remain unknown, officials are still trying to locate the Cryptoqueen and bring her to justice over her fraudulent schemes. Before the investigation by the U.S. Department of Justice, Ignatova appeared at numerous events and on social media to promote OneCoin, according to BBC.

However, around October 2017, the Cryptoqueen disappeared from the public eye, and since then, there has not been a confirmed sighting of Ignatova. The Federal Bureau of Investigation (FBI) has also offered up to a $250,000 reward for any information that could lead to the individual's arrest.

The Justice Department said that despite OneCoin's claims, it did not have a true blockchain, which is a public and verifiable blockchain, any mining operations, or even had enough coins on its private blockchain to match those sold.

Greenwood's sentence comes as he has been in custody since 2018 after an extradition from Thailand. His 20-year sentence is only a third of the 60-year sentence he could have received in the case. He allegedly spent the money he stole on luxury goods and a corresponding lifestyle, said the Coin Telegraph.