4 Russian Nationals Indicted in Running a $340 Million Crypto Ponzi Scheme
The US authorities alleged Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev, and Sergey Maslakov – the founders of the dubious cryptocurrency investment platform Forsage – to have orchestrated a global pyramid scheme that conned investors with approximately $340 million.
All defendants are charged with conspiracy to commit wire fraud and could receive a maximum penalty of 20 years in jail.
Another Multi-Million Scam?
A federal grand jury in the District of Oregon claimed that Forsage’s founders portrayed the platform as a legitimate decentralized matrix project based on network marketing and smart contracts.
The Russian execs also presented their business as a lucrative investment opportunity, thus attracting a great number of investors. Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division commented:
“Together with our partners, the department is committed to holding accountable fraudsters who cheat investors, including in the emerging DeFi space. 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.”
The authorities stressed that the defendants organized their alleged scam on the Ethereum, Binance Smart Chain, and Tron blockchains. Further analysis showed that earlier investors received funds paid by newcomers, representing the main principle of a pyramid scheme.
According to investigators, more than 80% of Forsage users obtained fewer ETH than they had invested in the platform’s Ethereum program, while half of the investors never got a single payout. The founders also supposedly coded one of the accounts (known as the “xGold”) in a way that “100% of the income goes directly and transparently to the members of the project with zero risk.”
Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division said the advancements in the cryptocurrency industry could be a double-edged sword since bad actors take advantage and could cause significant financial damage to unsuspecting victims.
The criminalists urged people to be utterly careful when entering the digital asset space and conduct proper due diligence before transferring funds or providing personal information to organizations or unknown individuals.
Okhotnikov, Oblamska, Sergeev, and Maslakov each face a maximum sentence of 20 years in prison if found guilty.
SEC Pressed Charges, too
The US Securities and Exchange Commission charged 11 individuals connected to Forsage last summer, including the four Russian founders. It insisted that the platform operated as a crypto Ponzi scheme for two years and drained over $300 million from victims.
The watchdog also sent a cease and desist letter to the platform in late 2020 and March 2021. Nonetheless, its executives ignored the request and kept promoting their business.
Two of the defendants agreed to pay disgorgement and civil penalties to settle issues with the SEC and were cleared of further investigation.
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