Four Russians have been charged in the US with operating a crypto pyramid and Ponzi scheme that defrauded investors of millions of dollars. If convicted, they would face a maximum sentence of 20 years in prison for their role in the allegedly decentralized finance (defi) platform Forsage.
Forsage founders accused of running cryptocurrency pyramid
A federal grand jury in the District of Oregon returned an indictment Wednesday indicting the founders of a defi crypto investment platform for what authorities believe was a global Ponzi scheme. The entity, Forsage, allegedly collected around $340 million from its victims, according to a advertisement by the US Department of Justice.
The 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, low-risk business opportunity. Sergeev, for example, introduced 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 created and run as a Ponzi and pyramid investment scheme that defrauded investors around the world. Each of the defendants is charged with conspiracy to commit wire fraud. If convicted, they would face up to 20 years in prison.
Court documents suggest that Russian citizens implemented 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 supposed “slot” in a smart contract, the funds were used to pay previous Forsage investors.
US Attorney Natalie Wight for the District of Oregon emphasized that the indictment is the result of a months-long investigation. “Filing charges against foreign actors who used new technology to commit fraud in an emerging financial market is a complicated task that is only possible with full and complete coordination of multiple law enforcement agencies,” she explained.
Blockchain forensics confirmed that more than 80% of Forsage investors received less ether (ETH) than they had invested in their Ethereum program. Additionally, at least one smart contract was used to siphon investor money into cryptocurrency accounts controlled by the founders.
Forsage launched online in January 2020. The Russians’ indictment comes after the US Securities and Exchange Commission (SEC) indicted 11 people in August last year, including the four co-founders and seven promoters of the platform, for their participation. in the creation and promotion of the fraudulent crypto pyramid and Ponzi scheme.
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