Ponzi Forsage Founders to Appear in Court for $300M Crypto Fraud

The Securities and Exchange Commission (SEC) of the United States has charged 11 individuals for creating and promoting Forsage, a fraudulent crypto pyramid and Ponzi scheme that operated in 2020.

This update came in a court document on August 1, 2022, where the US regulator filed a seven-count charge on the founders of the Forsage scheme, who raised over $300 million from retail investors worldwide.

In January 2020, founders Vladimir Okhotnikov, Jane Doe, Mikhail Sergeev, and Sergey Maslakov created, operated, and maintained the online pyramid Forsage.io, allowing millions of retail investors in the US and elsewhere to enter into transactions via smart contracts that operated on the Ethereum, Tron, and Binance blockchains.

Facing the SEC charges alongside the four founders are three US-based promoters engaged by the founders to endorse Forsage on its website and social media platforms and several members of the so-called Crypto Crusaders, the largest promotional group for the scheme.

By the typical pyramid scheme operation, Forsage allegedly used assets from new investors to pay earlier investors. It carried on for more than two years, defying two cease-and-desist orders against it in September 2020 by the SEC of the Philippines and the Montana Commissioner of Securities and Insurance in March 2021.

Part of the SEC’s complaint was that the founders “raised funds from retail investors via unregistered offer and sale of securities” and, in connection, “defrauded investors and further engaged in practices that operated as a fraud or deceit upon those investors.”

The case is currently in the United States District Court for the northern district of Illinois Eastern division.