Founders of Forsage Crypto Scam Worth $340M Face 20 Years in Prison
- The federal grand jury in the District of Oregon have indicted the founders of an alleged scam crypto platform called Forsage.
- The four Russian founders — Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov — face up to 20 years in prison.
- The founders aggressively marketed Forsage and received $340 million from investors for their alleged Ponzi scheme.
- Over 80% of the investors in Forsage’s Ethereum Program received fewer ETH back than they had invested while over 50% of investors never received a single payout.
The US regulators have become increasingly vigilant when it comes to crypto scams and fraudulent schemes owing to the huge number of such scams taking place in the year 2022. The newest case comes from the Department of Justice (DoJ), wherein the federal grand jury in the District of Oregon have indicted the founders of an alleged scam crypto platform called Forsage.
The press release from the DoJ stated that the founders of Forsage, Vladimir Okhotnikov, aka Lado; Olena Oblamska, aka Lola Ferrari; Mikhail Sergeev, aka Mike Mooney, aka Gleb, aka Gleb Million; and Sergey Maslakov; were involved in the Ponzi scheme, which allegedly duped investors out of $340 million. This marks the first time that the US authorities have been involved in a case involving a DeFi Ponzi scheme.
“Together with our 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. “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.”
The DoJ’s statement claims that the Russian founders of Forsage touted the platform as a decentralized matrix project based on network marketing and smart contracts. The founders aggressively promoted the crypto platform via various campaigns as “a legitimate and lucrative business opportunity.”
However, in reality, Forsage was a Ponzi and pyramid investment scheme that duped $340 million from investors around the globe. The press statement confirms that the founders of Forsage “coded and deployed smart contracts that systematized their combined Ponzi-pyramid scheme on the Ethereum (ETH), Binance Smart Chain, and Tron blockchains.”
After a deep analysis of the code used by Forsage, authorities concluded that once an investor purchased a “slot” in the smart contract, his funds were automatically diverted to the portfolio of an earlier investor. Therefore, it is clear that the earlier investors were paid with funds from later investors.
Furthermore, over 80% of the investors in Forsage’s Ethereum Program received fewer ETH back than they had invested, while over 50% never received a single payout. Interestingly, the founders also coded an account in such a way that a part of the funds from the investors were transferred to this account, which was in the control of the founders of the platform.
The Russian founders of Forsage have been charged with conspiracy to commit wire fraud and face up to 20 years in prison.
Special Agent in Charge Ivan J. Arvelo of Homeland Security Investigations (HSI) New York commented:
“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 our partners, we’re able to see through the phony promises and bring the schemes to light. 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.”