The founders of Forsage, a decentralized finance (DeFi) cryptocurrency investment platform, have been charged with running a global Ponzi and pyramid scheme that raised approximately $340 million from victim investors.
The indictment was handed down by a federal grand jury in the District of Oregon and charged Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov, all Russian nationals, with conspiracy to commit wire fraud.
Forsage operating as a Ponzi and pyramid investment scheme
According to the allegations included in the indictment, the four defendants actively advertised Forsage to the general public through social media under the guise of a decentralized matrix project that was founded on network marketing and smart contracts. Yet, the defendants really ran Forsage as a Ponzi and pyramid investment scam all along.
They allegedly coded and deployed smart contracts that systematized their combined Ponzi pyramid scheme on the Ethereum (ETH), Binance Smart Chain, and Tron blockchains.
The defendants allegedly diverted the investor’s funds to other Forsage investors through the smart contracts, meaning earlier investors were paid with funds from later investors, consistent with a Ponzi scheme. Blockchain analytics confirmed that over 80% of Forsage investors received fewer ETH back than they had invested in Forsage’s Ethereum program, with over 50% of investors never receiving a single payout.
False promotion of a legitimate, low-risk, and lucrative investment opportunity
Using Forsage’s website and a variety of social media channels, the defendants are accused in the indictment of making false representations to the general public about the legitimacy, low risk, and potential profitability of the investment opportunity presented by Forsage. They made it seem like a legal and attractive business opportunity to potential investors all over the globe, but in fact, they were trying to scam those people out of their money.
HSI is committed to being at the forefront of financial investigations, using the full extent of our investigative capabilities to track down criminals no matter what new tricks they use, said Special Agent in Charge Ivan J. Arvelo of Homeland Security Investigations (HSI) New York. But, as the indictment alleges, all they were doing was running a classic Ponzi scheme.
The technology may change, but the scams remain the same, and with the collaboration amongst all their partners, he said that they’re able to see through the phony promises and bring the schemes to light.
Investigative tools and blockchain analytics
Together with their partners, the department is committed to holding accountable fraudsters who cheat investors, including in the emerging DeFi space, said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. He added that today’s indictment showcases the department’s ability to use all available investigative tools, including blockchain analysis, to uncover sophisticated frauds involving cryptocurrency and digital assets.
Bringing charges against foreign actors who used new technology to commit fraud in an emerging financial market is a complicated endeavor only possible with the full and complete coordination of multiple law enforcement agencies. It is a privilege to work alongside the agents involved in these complex cases, said U.S. Attorney Natalie Wight for the District of Oregon.
