A group of alleged Russian scammers have been charged by U.S. authorities for stealing a hefty $340 million from unsuspecting victims. The four alleged scammers behind the Ponzi scheme ran a platform called Forsage promising high returns on investment to those who put their money in.
Their scam was aggressively promoted through social media, luring millions of retail investors into smart contracts that operated on the Ethereum, Tron, and Binance blockchains.
“These individuals are alleged to have used trendy technology and opaque language to swindle investors out of their hard-earned cash,” explained Ivan J. Arvelo, head of Homeland Security Investigations in New York about the alleged Russian scammers. “But, as the indictment alleges, all they were doing was running a classic Ponzi scheme. The technology may change, but the scams remain the same.”
How Forsage Ponzi Scheme Operated
When an investor put crypto into Forsage by purchasing a “slot” in a Forsage smart contract, the contract automatically diverted the investor’s money to earlier Forsage investors. This created the impression that their investments were being returned eventually, but in reality, it was fueled by a steady stream of new investors.
The defendants have now been indicted for conspiracy to commit wire fraud.
Lol 2020…I guess no matter if a thing is a ponzi or not, what you do with the information you have at a particular time matters. And I believe they were others like me who went further to explore the Defi space after venturing into forsage and we’re glad we did!
— Terror (♟,♟) (@TerrorMIKAELSON) February 28, 2023
“Bringing charges against foreign actors who used new technology to commit fraud in an emerging financial market is a complicated endeavor only possible with the full and complete coordination of multiple law enforcement agencies,” said Oregon’s U.S. Attorney Natalie Wight about the fraud in a statement.
The scam had been running for over two years and crypto investors were promised profits if they recruited others to invest, but more than half of them never received a single payout.
The nature of Forsage’s operation on the blockchains made it difficult to track down and prosecute the alleged Russian scammers. However, federal prosecutors were eventually able to identify and charge the four defendants, who remain out of custody.
The case was a complicated endeavor that required the full and complete coordination of multiple law enforcement agencies. The Portland FBI worked on the case alongside the U.S. Postal Inspection Service and New York-based federal agents from Homeland Security Investigations.
The Securities and Exchange Commission also played a role in the case, alleging that Okhotnikov was “the face” of the Forsage operation.
He hosted many of its YouTube videos and appeared in interviews with promoters and continues to put out content claiming innocence. The SEC issued a cease-and-desist order against the Forsage platform last summer, but this was unsuccessful in stopping the alleged Russian scammers.
Okhotnikov’s lawyer argued that U.S. courts lack authority over him because he’s a foreign national who has never been to the United States.
Despite the charges and evidence against them, the defendants have denied any wrongdoing. Okhotnikov, in particular, has been vocal in his defense of the Forsage platform, claiming that it is not a scam because “real scams can never win people’s hearts.”
The case is a warning to investors worldwide to be wary of promises of high returns on investment and to thoroughly research any platforms before investing.
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