The founders behind the alleged $340 million “global Ponzi” scheme Forsage have been indicted by a federal grand jury in the District of Oregon.
The four Russian founders — Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev and Sergey Maslakov — have been formally charged with having key roles in the scheme that raised about $340 million from victim-investors, the Department of Justice (DOJ) said on February 22. ) statement.
“Today’s indictment is the result of a rigorous investigation that took months to piece together the systematic theft of hundreds of millions of dollars,” said U.S. Attorney Natalie Wight for the District of Oregon, adding:
“Prosecuting foreign actors who used new technology to commit fraud in an emerging financial market is a complex endeavor that is only possible with the full and complete coordination of multiple law enforcement agencies.”
Forsage had advertised itself as a low-risk decentralized finance (DeFi) platform based on the Ethereum (ETH) blockchain that supposedly allowed users to generate long-term passive income, but Blockchain analysis revealed that 80% of its “investors” Forsage have received less than they put in.
According to the Department of Justice, analysis of the smart contracts revealed that funds raised as new investors bought “slots” in Forsage’s smart contracts were diverted to larger investors, consistent with a “Ponzi scheme.”
Forsage still has an active Twitter account, which posted a thread on February 22 claiming that community members participating in “The Ambassador Program” will be able to earn monthly rewards by completing certain tasks.
Pre-registration will open soon, so don’t hesitate to be one of the first!
The Ambassador Program is an opportunity not only to earn rewards, but also to attract new members to the team, get to know the products better and expand your horizons in the world of Web3.
— FORSAGE (@forsageofficial) February 22, 2023
On August 1, 2022, the Securities and Exchange Commission (SEC) had charged the four founders and seven backers with fraud and selling unregistered securities, with Acting Head of the SEC’s Crypto Assets and Cyber Unit, Carolyn Welshhans, noting at the time:
“Fraudsters cannot circumvent federal securities laws by focusing their schemes on smart contracts and blockchain.”
The Securities and Exchange Commission of the Philippines had also flagged Forsage as a possible Ponzi in 2020, but a month later the platform was still the second most popular DA application on the Ethereum blockchain.
Related: Crypto, forex platform CEO pleads guilty to $248 million fraud scheme
While an indictment refers to when a prosecutor brings criminal charges and charges a person or group with a crime, an indictment is filed by a grand jury if prosecutors are able to convince a majority of them that a formal charge is warranted after an investigation.
Grand juries are common in federal and serious state felonies.