Forsage Founders Indicted in $340M DeFi Crypto Scheme | OPA

A federal grand jury in the District of Oregon today returned an indictment charging four founders of Forsage, an alleged decentralized finance (DeFi) investment platform for cryptocurrencies, for their roles in a global Ponzi and pyramid scheme that collected approximately $340 million from victims – investors.

According to court documents, Vladimir Okhotnikov, aka Lado; Olena Oblamska, aka Lola Ferrari; Mikhail Sergeev, aka Mike Mooney, aka Gleb, aka Gleb Million; and Sergey Maslakov, all Russian citizens, reportedly designated Forsage as a decentralized matrix project based on network marketing and “smart contracts,” which are self-executing contracts on the blockchain. As alleged in the indictment, the defendants aggressively promoted Forsage to the public through social media as a legitimate and lucrative business opportunity, but in reality, the defendants operated Forsage as a Ponzi and pyramid scheme investing approximately $340 million from victim investors. around the Earth.

“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. at the Ministry of Justice’s criminal department. “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.”

According to court documents, the defendants allegedly coded and distributed smart contracts that systematized their combined Ponzi scheme on the Ethereum (ETH), Binance Smart Chain and Tron blockchains. Analysis of the computer code underlying Forsage’s smart contracts allegedly revealed that, in accordance with a Ponzi scheme, once an investor invested in Forsage by purchasing a “slot” in a Forsage smart contract, the smart contract automatically directed the investor’s funds to other Forsage investors, so that earlier investors were paid with funds from later investors.

“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.”

As further alleged in the indictment, the defendants falsely promoted Forsage to the public as a legitimate, low-risk and lucrative investment opportunity through Forsage’s website and various social media platforms. However, blockchain analysis confirmed that over 80% of Forsage investors received less ETH back than they had invested in Forsage’s Ethereum program, with over 50% of investors never receiving a single payout. Additionally, according to court documents, the defendants coded at least one of Forsage’s accounts (known as the “xGold” smart contract on the Ethereum blockchain) in a way that fraudulently siphoned investors’ funds out of the Forsage investment network and into cryptocurrency accounts under the founders’ control, which contradicted representations to Forsage investors that “100% of [Forsage] income goes directly and transparently to the members of the project without risk.”

“While advances in the virtual asset ecosystem are creating new opportunities for investors, criminals are also finding new ways to orchestrate illegal schemes,” said Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division. “The FBI remains committed to working with our domestic and international law enforcement partners to investigate and prosecute individuals who orchestrate these scams and attempt to defraud investors.”

“Technology is always changing, and fraud and scams are evolving alongside it,” said Inspector Eric Shen of the US Postal Inspection Service (USPIS), Criminal Investigations Group. “The US Postal Inspection Service is committed to investigating those who participate in schemes involving cryptocurrency investment fraud, which can cause significant financial harm to unsuspecting victims. We encourage individuals to exercise caution when considering investments and always do their due diligence before they give money or personal information to a person or organization.”

“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 run a classic Ponzi scheme. The technology may change, but the scams remain the same, and with the cooperation of all our partners, we are able to see through the false promises and bring schemes into the light. HSI is committed to being at the forefront of financial investigations, using the full range of our investigative capabilities to track down criminals no matter what new tricks they use.”

Okhotnikov, Oblamska, Sergeev and Maslakov are each charged with conspiracy to commit wire fraud. If convicted, the defendants face a maximum sentence of 20 years in prison.

The FBI Portland Field Office, USPIS and HSI New York’s El Dorado Task Force are investigating the case.

Trial attorneys Sara Hallmark and Tian Huang of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Quinn Harrington and Meredith Bateman for the District of Oregon are prosecuting the case.

All investor victims of the Forsage scheme are encouraged to visit the website www.justice.gov/criminal-vns/case/united-states-v-vladimir-okhotnikov-et-al to identify themselves as potential victims and obtain more information about their rights as victims, including the opportunity to submit a victim impact assessment.

An indictment is only an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.