Forsage Founders Indicted By DOJ For $340 Million DeFi Ponzi Scheme

Key Points:

• The 4 Forsage founders have been indicted by the US Department of Justice (DOJ) for their involvement in a $340 million DeFi Ponzi scheme.
• It is alleged that the defendants encrypted and deployed smart contracts to systematize their combined Ponzi scheme on the Ethereum (ETH), Binance Smart Chain, and Tron blockchains.
• If charges are established, the defendants will face up to 20 years in prison.
• Earlier, the US SEC also brought charges against 11 participants for creating Forsage, a crypto scam of more than $300 million.

The 4 Forsage founders are facing charges of deploying a Ponzi scheme to defraud the US Department of Justice (DOJ).

According to the official website of the US Department of Justice, the four founders of the crypto pyramid project Forsage have been indicted by the US Department of Justice for their involvement in a $340 million DeFi Ponzi scheme.

The four defendants, Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov, are both charged with conspiring to commit wire fraud and face up to 20 years in prison if convicted.

In January 2020, they launched Forsage.io, which allows millions of retail investors to trade on the Ethereum, Tron, and BNB Chain through smart contracts, profiting by recruiting others to join the program and use New Investor Assets to pay early investors in a typical Ponzi scheme structure.

Analysis of the computer code underlying Forsage’s smart contracts is said to have revealed that, consistent with a Ponzi scheme, as soon as an investor invests in Forsage by purchasing a “position” in Forsage smart contract, the smart contract will automatically transfer investor’s money to other Forsage investors, such that previous investors have been paid with money from later investors.

Defendants falsely advertised Forsage to the public as a legitimate, low-risk, and lucrative investment opportunity through the Forsage website and social media platforms.

However, blockchain analyses have confirmed that over 80% of Forsage investors have received less ETH than they invested in Forsage’s Ethereum program, with over 50% never receiving a return receive any payment.

Before that, in August last year, the US SEC accused 11 participants of creating Forsage, a crypto scam of more than $300 million.

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