US authorities alleged that Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev and Sergey Maslakov, the founders of dubious cryptocurrency investment platform Forsage, orchestrated a global pyramid scheme that defrauded investors out of approximately $340 million.
All of the defendants are charged with conspiracy to commit wire fraud and could receive a maximum sentence of 20 years in prison.
Another multi-million dollar scam?
A federal grand jury in the District of Oregon reclaimed that the founders of Forsage portrayed the platform as a legitimate decentralized matrix project based on network marketing and smart contracts.
The Russian executives also presented their business as a lucrative investment opportunity, thus attracting a large number of investors. Assistant Attorney General Kenneth A. Polite, Jr. of the Department of Justice’s Criminal Division commented:
“Together with our partners, the department is committed to holding accountable fraudsters who mislead investors, including in the emerging DeFi space. Today’s indictment showcases the department’s ability to use all available investigative tools, including blockchain analysis, to uncover sophisticated fraud involving cryptocurrency and digital assets.”
Authorities highlighted that the defendants organized their alleged scam on the Ethereum, Binance Smart Chain, and Tron blockchains. Further analysis showed that previous investors received funds paid by newcomers, representing the main principle of a pyramid scheme.
According to the researchers, more than 80% of Forsage users earned less ETH than they had invested in the platform’s Ethereum program, while half of investors never made a single payment. Supposedly, the founders also coded one of the accounts (known as “xGold”) so that “100% of the proceeds go directly and transparently to project members with zero risk.”
Deputy Director Luis Quesada of the FBI’s Criminal Investigation Division said developments in the cryptocurrency industry could be a double-edged sword, as bad actors take advantage and could cause significant financial damage to unsuspecting victims.
Criminalists urged people to be very careful when entering the digital asset space and to perform proper due diligence before transferring funds or providing personal information to unknown organizations or individuals.
Okhotnikov, Oblamska, Sergeev and Maslakov each face a maximum sentence of 20 years in prison if convicted.
The SEC also filed charges.
The US Securities and Exchange Commission loaded 11 people connected to Forsage last summer, including the four Russian founders. He insisted that the platform operated as a crypto Ponzi scheme for two years and extracted more than $300 million from the victims.
The watchdog also sent a cease and desist letter to the platform in late 2020 and March 2021. However, its executives ignored the request and continued to promote their business.
Two of the defendants agreed to pay repayment and civil penalties to resolve the issues with the SEC and were cleared of further investigation.
Binance Free $100 (Exclusive) – Use this link to sign up to receive $100 free and 10% off your first month’s fees for Binance Futures (terms).
PrimeXBT Special Offer – Use this link to sign up and enter the code POTATO50 to receive up to $7,000 on your deposits.
