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Four Russians have been charged in the US with running a crypto-pyramid and Ponzi scheme that defrauded investors out of millions of dollars. If convicted, they face a maximum sentence of 20 years in prison for their roles in the alleged decentralized finance platform (defi) Forsage.
A federal grand jury in the District of Oregon on Wednesday returned an indictment charging the founders of a defi-crypto investment platform with what authorities say was a global Ponzi scheme. The entity, Forsage, allegedly collected about $340 million from its victims, according to an announcement from the US Department of Justice.
All four defendants – Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev and Sergey Maslakov – are citizens of the Russian Federation. Some of them used one or more aliases while aggressively promoting the project through their website and social media as a legitimate, lucrative and low-risk business opportunity. Sergeev, for example, presented himself as Mike Mooney or Gleb Million.
Forsage was announced to the public as a decentralized matrix project based on network marketing and smart contracts. In reality, it was set up and run as a Ponzi and pyramid investment scheme defrauding investors worldwide. The defendants are each charged with conspiracy to commit wire fraud. If convicted, they face up to 20 years in prison.
Court documents suggest that the Russian nationals distributed smart contracts on the Ethereum, Binance Smart Chain and Tron blockchains. Analysis of the code showed that as soon as someone invested in Forsage by purchasing a so-called “slot” in a smart contract, the funds were used to pay previous Forsage investors.
U.S. Attorney Natalie Wight for the District of Oregon emphasized that the indictment is the result of a months-long investigation. “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,” she elaborated.
Blockchain investigation confirmed that over 80% of Forsage investors received less ether (ETH) back than they had invested in the Ethereum program. Also, at least one smart contract was used to redirect investors’ money to cryptocurrency accounts controlled by the founders.
Forsage was launched online in January 2020. The indictment against the Russians comes after the US Securities and Exchange Commission (SEC) last August charged 11 people, the four co-founders and seven promoters of the platform, for their participation in creating and promoting the fake the crypto pyramid and the Ponzi scheme.
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