Four founders of the DeFi ponzi scheme Forsage have been formally charged by a federal grand jury for defrauding investors of $340 million.
According to a press release by the US Department of Justice (DOJ) on Wednesday, February 22nd, a federal grand jury in the District of Oregon has indicted four Russian nationals for having key roles in a crypto ponzi scheme that siphoned off $340 million from investors around the world.
Forsage Smart Contracts Were Consistent a Ponzi Scheme
According to DOJ, the court document reveals that Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov used smart contracts to “systematized their combined Ponzi-pyramid scheme on the Ethereum (ETH), Binance Smart Chain, and Tron blockchains.”
They aggressively promoted Forsage through social media and website as a legitimate and lucrative business opportunity that would return on investments. But in reality, Forsage smart contracts were “consistent with a ponzi scheme” that just altered the course of investors’ funds.
The DOJ statement reads:
“As soon as an investor invested in Forsage by purchasing a “slot” in a Forsage smart contract, the smart contract automatically diverted the investor’s funds to other Forsage investors, such that earlier investors were paid with funds from later investors.”
As per the press release, blockchain analysis reveals that more than 80% of Forsage investors received fewer ETH payouts than they invested in the platform’s Ethereum program. Nearly 50% of the investors never received a return on their investments.
Forsage founders promised investors that “100% of the [Forsage] income goes directly and transparently to the members of the project with zero risk.” But, in stark contrast, these four perpetrators deployed at least one smart contract on Ethereum, named xGold, that “siphoned investors’ funds out of the Forsage investment network and into cryptocurrency accounts under the founders’ control.”
Nevertheless, Forsage’s Twitter account is still active. The latest post just came on Wednesday, February 22nd, announcing an Open Ambassador Program that will reward loyal users monthly for completing certain tasks.
In July 2020, the Philippines’ Securities and Exchange Commission also flagged Forsage as a ponzi scheme. However, it was still the second-most popular Ethereum Dapps in the next month.
Each reported Forsage founder has been charged with conspiracy to commit wire fraud. If proven guilty, they will have to spend a maximum of 20 years behind bars. DOJ noted that indictments are merely allegations and they should be presumed innocent until proven guilty. FBI, Homeland Security Investigations (HSI), and others are still investigating the case.
