4 Forsage founders indicted in Oregon over $340M Ponzi scheme

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The founders of Forsage, a decentralized finance (DeFi) investment platform, have been indicted by a federal grand jury in Oregon on charges related to fraud and operating a Ponzi scheme.

Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov were named in the February 22 indictment for their roles in fleecing investors. Court documents reveal that the founders are all Russian citizens and are facing up to 20 years in a U.S. federal prison.

“Today’s indictment is the result of a rigorous investigation that spent months piecing together the systematic theft of hundreds of millions of dollars,” U.S. Attorney Natalie Wight said. “Bringing charges against foreign actors who used new technology to commit fraud in an emerging financial market is a complicated endeavor only possible with the full and complete coordination of multiple law enforcement agencies.”

The founders paraded Forsage as a DeFi investment platform capable of giving lucrative returns on deposits, according to the documents. Investors were further incentivized by claims that the project used smart contracts to streamline processes, but in reality, it served as the nuts and bolts for a Ponzi scheme.

Investigators allege that Forsage’s founders deployed smart contracts on Ethereum, Binance Smart Chain, and Tron, which automatically moved a portion of new investments to the wallets of earlier investors. The prosecutors assert that after a thorough on-chain analysis of Forsage’s operation, there arose a litany of evidence suggesting that the platform was “consistent with a Ponzi scheme.”

The total losses investors suffer exceed $340 million, with as much as 80% of investors receiving less than the digital currencies they invested in the scheme. 50% of Forsage’s investors failed to receive a payout in the scheme that was marketed as a “legitimate, low-risk, and lucrative investment opportunity.”

“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,” said Ivan Arvelo from Homeland Security Investigations.

Countering bad actors in the space

Law enforcement agencies have begun hitting back at digital currency bad actors with several indictments, convictions, and recoveries over the last month. In the U.S., the Department of Justice (DoJ) has multiple cases in court against Ponzi scheme operators while the Securities and Exchange Commission (SEC) continues to flex its muscles.

Across the Atlantic, Norwegian authorities seized nearly $6 million linked to the 2022 Ronin hack in collaboration with U.S. authorities. U.K. authorities have also placed members of a Russian hacking cartel under stern sanctions in response to a recent attacking spree.

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—from BitMEX to Binance, Bitcoin.com, Blockstream, ShapeShift, Coinbase, Ripple,
Ethereum, FTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.