Russian Founders of Defi Platform Forsage Indicted in $340 Million Crypto Ponzi Scheme – On Wednesday, the founders of a decentralized finance (defi) cryptocurrency investment platform were charged in an indictment returned by a federal grand jury in the District of Oregon. The U.S. Justice Department has announced that Forsage, the accused entity, is believed to have run a worldwide Ponzi scheme and obtained approximately $340 million from its victims.
Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov, all citizens of the Russian Federation, have been indicted. They aggressively promoted the project through its website and social media using one or more aliases to present it as a legitimate, low-risk, and profitable business opportunity. For instance, Mikhail Sergeev presented himself as Mike Mooney or Gleb Million.
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Despite being advertised as a decentralized matrix project relying on network marketing and smart contracts, Forsage operated as a Ponzi and pyramid investment scheme, deceiving investors worldwide. The accused individuals are charged with conspiring to commit wire fraud, which carries a maximum sentence of 20 years in prison upon conviction.
According to court documents, the indicted Russian citizens utilized smart contracts on the Ethereum, Binance Smart Chain, and Tron blockchains. Analysis of the code revealed that when an individual invested in Forsage by purchasing a “slot” in a smart contract, their funds were immediately used to compensate earlier investors in the scheme. U.S. Attorney Natalie Wight, who serves the District of Oregon, emphasized that the indictment is the outcome of a prolonged investigation.
“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,” she elaborated. Forensic analysis of the blockchain confirmed that more than 80% of Forsage investors who participated in the Ethereum program received less ether than their initial investment.
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Additionally, it was discovered that at least one smart contract was utilized to channel investors’ funds into cryptocurrency accounts owned and managed by the company’s founders. Forsage was launched online in January, 2020. The indictment of the Russians comes after in August, last year, the U.S. Securities and Exchange Commission (SEC) charged 11 people, the four co-founders and seven promoters of the platform, for their participation in creating and promoting the fraudulent crypto pyramid and Ponzi scheme.