4 indicted after defrauding $340 million from DeFi crypto investors

(AP Photo/Kin Cheung, file)

PORTLAND, Ore. (KOIN) — An Oregon federal grand jury on Wednesday returned an indictment accusing four founders of a decentralized financial cryptocurrency platform of taking roughly $340 million from victims around the world.

Officials identified the founders of the crypto-investment platform Forsage as Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev and Sergey Maslakov, all of whom are Russian citizens.

The Oregon Department of Justice claims the four promoted Forsage as a “decentralized matrix project” based on “smart contracts,” which are self-executing contracts on the blockchain, and further promoted the company on social media as a legitimate business opportunity.

“Together with our partners, the department is committed to holding accountable fraudsters who defraud investors, including in the emerging DeFi space,” Assistant Attorney General Kenneth A. Polite, Jr. said. “Today’s indictment demonstrates the department’s ability to use all available investigative tools, including blockchain analytics, to uncover sophisticated fraud involving cryptocurrency and digital assets.”

The defendants allegedly used the smart contracts that “systematized their combined Ponzi pyramid scheme” on the Ethereum, Binance Smart Chain and Tron blockchains, the Oregon DOJ said.

Officials said the computer code on Forsage’s smart contracts will automatically redirect investor funds to crypto accounts under the founder’s control.

“Today’s indictment is the result of a rigorous investigation that took months to piece together the systematic theft of hundreds of millions of dollars,” said U.S. Attorney Natalie Wight for the District of Oregon. “Prosecuting foreign actors who used new technologies to commit fraud in an emerging financial market is a complex endeavor that is 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.”

Blockchain analysis found that 80% of Forsage investors received less ETH back than they had invested in the blockchain, and over half of investors did not receive a single payout, the Oregon DOJ said.

“These individuals are alleged to have used trendy technology and opaque language to swindle investors out of their hard-earned money,” said Special Agent Ivan J. Arvelo of Homeland Security Investigations (HSI) New York. “However, as the indictment alleges, all they did was operate a classic Ponzi scheme.”

Okhotnikov, Oblamska, Sergeev and Maslakov were charged with conspiracy to commit wire fraud and face a maximum sentence of 20 years in prison.