A Federal Jury Indicts Founders Behind $340M Decentralized Finance Ponzi Scheme

The people responsible for establishing a DeFi investment forum named Forsage have been accused of organizing a worldwide Ponzi scheme of up to $340M.

4 Russian founders, including Sergey Maslakov, Mikhail Sergeev, Olena Oblamska, and Vladimir Okhotnikov, have been officially accused of the respective charges. The Department of Justice mentioned this in a statement published by the Department of Justice.

Forsage Founders Face an Indictment for Allegedly Running a Ponzi Project of $340M

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In the statement, the agency noted that the founder allegedly promoted the respective project as a DeFi matrix program based on smart contracts and network marketing built on blockchain technology.

The indictment revealed that they aggressively touted the project among the common masses with the use of the social media platform. As per the indictment, they presented the project as a lucrative and legitimate business opportunity.

However, the indictment added, the defendants ran a pyramid investment and Ponzi scheme under the title “Forsage” to loot the unnoticing investors. As a result of the project, the founders allegedly took away up to $340M from the investors victimized by them across the globe. According to the statement of the DoJ, the Forsage founders operated in mutual collaboration.

Nonetheless, the agency expressed its determination to hold the fraudsters accountable for defrauding the investors. Kenneth A. Polite, Jr. (Assistant Attorney of the Criminal Division under the DoJ) stated that the bad actors are growing across the DeFi space. As per the assistant attorney, the latest indictment indicates the huge potential of the agency.

As per the official, the DoJ can utilize the existing investigative instruments taking into account blockchain analysis, to unveil sophisticated scams dealing with digital assets and cryptocurrencies.

As noted in the court filings, the defendants allegedly deployed and coded smart contracts to systematize their mutual Ponzi project on Tron, Binance Smart Chain, and Ethereum blockchains.

The statement further disclosed that an investigation was conducted on the code underlying the smart contracts of Forsage. As discovered in the findings of the respective investigation, it was consistent with a pyramid investment project.

The current indictment has been carried out after a hard investigation that consumed several months, according to Natalie Wight (the US Attorney for the District of Oregon).

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As per the attorney, the indictment brings allegations against foreign people who utilized the latest technology to organize a scam in a developing financial market. The attorney labeled this move as a complex effort that is only possible as a result of complete and comprehensive coordination between several law enforcement organizations.

The people behind Forsage touted the project as a decentralized and low-risk finance program developed on the blockchain of Ethereum. As per them, it would permit the consumers to get passive income for the long term.

However, blockchain analytics disclosed that eighty percent of investors of Forsage had gotten back less than the funds deposited by them. The Twitter account of Forsage is still active and shared a thread of tweets on February 22.

Regulators Around the Globe Eye Forsage as a Ponzi Scheme

The platform claimed that monthly rewards would be provided to the community members who take part in “The Ambassador Program” by completing several tasks. Back on August 1, the SEC accused the four founders as well as seven promoters of trading unregistered securities and fraud.

Even before that, in 2020, the Securities and Exchange Commission of the Philippines had additionally cautioned that the project could be a Ponzi.