The four Forsage founders were accused of participating in a “global Ponzi and pyramid scheme,” according to a Department of Justice report from February 22.
The announcement identified the offenders as Vladimir Okhotnikov, Olena Oblamskai, Mikhail Sergeev, and Sergey Maslakov.
The four reportedly “touted Forsage as a decentralized matrix project based on network marketing and smart contracts,” according to the DoJ.
The accusations include stealing $340 million from “victim investors” to fund the project.
According to Criminal Division Assistant Attorney General Kenneth Polite Jr. of the Justice Department:
“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.”
Authorities have been accused of using extrajudicial sweeps to target innocent DeFi and cryptocurrency businesses. Nevertheless, if they want to make the market safer for investors, they should devote more effort to pursuing crooks.
The four founders are also accused of conspiring to conduct wire fraud. If found guilty, they might receive a sentence as long as 20 years in jail.
In August 2022, the Securities and Exchange Commission (SEC) brought charges against the Forsage operators. Its original grievance dates from the beginning of 2020. The agency reported the DeFi platform as a pyramid scheme where existing investors made money by signing up new participants.
Additionally, this was confirmed by a review of the platform’s DeFi smart contracts. As soon as an investor bought a “slot” on the site, the contract redistributed their cash to earlier investors.
According to attorney Natalie Wight, the indictment was the “outcome of a painstaking investigation that spent months piecing together the systematic theft of hundreds of millions of dollars.”
According to Assistant Director Luis Quesada of the FBI’s Criminal Investigation Division, the crypto ecosystem’s development offers investors new chances, but “criminals are also discovering new methods to organize unlawful schemes.”
Ivan Arvelo, a special agent of Homeland Security Investigations (HSI), made the following observation:
“These individuals are alleged to have used trendy technology and opaque language to swindle investors out of their hard-earned cash.”
Moreover, platforms in the DeFi industry frequently promise inflated profits to increase revenue to shady platforms.
DeFi scams, hacks, and vulnerabilities have caused more than $75 billion in damages, according to DeFi Yield’s Rekt database.