A federal grand jury in the District of Oregon has indicted four Russian nationals who founded cryptocurrency investment platform Forsage for decentralized finance (DeFi) with allegedly running a global Ponzi and pyramid scheme that raised $340 million.

Forsage has been promoted as a “smart contract system” that automatically distributes earnings to investors based on an algorithm, not requiring manual withdrawal requests.

The project promised 100% transparency, complete decentralization, peer-to-peer transactions, no owners/admins, no risk of scams or sudden shutdowns, and no companies or third parties involved.

However, the reality couldn’t be further from this, as most Forsage investors soon discovered that they were not making any profit and in many cases lost all of their investments.

The defendants, Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev and Sergey Maskalov, are accused of spreading aggressive fake ads on social media, pushing misleading investments and Forsage-related business opportunities to aspiring investors.

Instead of a legitimate investment scheme, the defendants coded and deployed smart contracts on Forsage which essentially systematized a combination of Ponzi and pyramid schemes on the Ethereum, Binance Smart Chain and Tron blockchains.

Using blockchain forensic analysis, it was confirmed that over 80% of Forsage investors received less ETH than they invested through Forsage. About half of all investors got nothing at all.

Court documents show that the platform’s founders used malicious code to direct a large portion of investors’ funds away from Forsage and into cryptocurrency wallets they controlled.

This contradicts Forsage’s promises to investors, including that “100% of revenue goes directly and transparently to project members with zero risk.”

If the four defendants are found guilty of the alleged crimes, they face a maximum prison sentence of 20 years each.

It should be noted that Forsage’s website and social media channels are still live, claiming that the platform has distributed over $2.3 billion to over 2 million investors (Twitter data), or $1.5 billion to 2.7 million investors (website data).