Four Russians Indicted in $340 million DeFi Crypto Scheme

Four founders of Forsage, a purportedly decentralized finance (DeFi) cryptocurrency investment platform, have been charged with conspiracy to commit wire fraud. 

According to a press release by the U.S. Department of Justice, Russian nationals Vladimir Okhotnikov (Lado), Olena Oblamska (Lola Ferrari), Mikhail Sergeev (Mike Mooney), Gleb (Gleb Million), and Sergey Maslakov, carried out a global Ponzi and pyramid scheme that raised approximately $340 million from victim-investors.

The FBI Portland Field Office, USPIS, and HSI New York’s El Dorado Task Force, who oversee the investigation, allege that the four crypto entrepreneurs advertised Forsage as a decentralized matrix project based on network marketing and “smart contracts.”

They used aggressive promotion tactics, harnessing approximately $340 million from victim-investors around the world. Analysis of the computer code underlying Forsage’s smart contracts showed that as soon as a person 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. 

This is consistent with a Ponzi scheme. Furthermore, over 80% of Forsage investors received fewer ETH back than they had invested in Forsage’s Ethereum program. More than 50% of investors never received a single payout. 

“Together with our partners, the department is committed to holding accountable fraudsters who cheat investors, including in the emerging DeFi space,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “Today’s indictment showcases the department’s ability to use all available investigative tools, including blockchain analysis, to uncover sophisticated frauds involving cryptocurrency and digital assets.”

Meanwhile, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division added that criminals are finding new ways to orchestrate illicit schemes all the time.

“The FBI remains committed to working alongside our domestic and international law enforcement partners to investigate and pursue subjects who orchestrate these scams and attempt to defraud investors,” he emphasized.

If convicted, the defendants face a maximum penalty of 20 years in prison.

Previously, GNcrypto reported that Interpol is thinking of how to prosecute fraudsters in the metaverse.

To find out how to spot a scam token, click this link.