Orchestrators of Ponzi Scheme ‘Forsage’ Charged by SEC

Lately it seems as though the SEC is releasing an increasing amount of statements, as it continues its assault on offenders within the world of digital assets.  The most recent of which involves 11 individuals and their involvement with a pyramid scheme involving hundreds of millions of dollars – ‘Forsage’.

What is Forsage?

The project known as Forsage was launched over two years ago, and has been a point of contention among many since day 1, with the more discerning investor identifying it immediately as a pyramid scheme.  Pushing huge returns, and the ability for investors to earn increasing amounts through the recruitment of others, Forsage is believed to have raised in excess of $300M since launch.

Through a slick website and DeFi oriented jargon, Forsage touted that it could provide investors with a means of long-term passive income, by operating a continual referral program.

The company described itself as a ‘Decentralized networking platform based on smart contracts that connects people from all over the world and opens the limitless possibilities of the new economic financial system’.

Who Was Charged, and with What?

The SEC has described Forsage as being a, ‘…fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors’.  Its actions against the company represent a global effort, as those accused reside in various corners of the world.  Of the 11 individuals being targeted, the primary four are the founders of Forsage.

• Vladimir Okhotnikov
• Lola Ferrari
• Mikhail Sergeev
• Sergey Maslakov

Various charges have been levied against these individuals including, ‘…violating the registration and anti-fraud provisions of the federal securities laws.’

It should be noted that this is not the first time Forsage has attracted unwanted attention from regulators.  In late 2020, only months after launch, the Philippines Securities and Exchange Commission issued a public warning against the company.  In it the Philippines SEC indicated that not only was the company not registered to offer investment contracts (i.e. securities), but that it was structured as a Ponzi scheme in which new investor funds were paid out to pre-existing investors.

Ramping Up Enforcement Efforts

If it seems like the SEC is allocating an increasing amount of its time to the digital asset sector lately, you wouldn’t be wrong.  In recent weeks the regulator has not only charged multiple former employees of Coinbase with insider trading, it has listed various digital assets as securities, and even launched a probe in to Coinbase itself.

The SECs determination that certain assets are securities has already resulted in platforms like Binance.US de-listing said assets.  This was on display when the popular exchange announced that out of an abundance of caution, and desire to remain compliant with regulations, it is rescinding support for ‘AMP’.

Most Wanted

Despite the best efforts of regulators to hold bad actors responsible for their actions, this does not always come to fruition.  This was recently highlighted when Ruja Ignatova, founder of notorious pyramid scheme OneCoin, was placed on the FBI Most Wanted List.

Despite being wanted and defrauding investors out of more than $4B, Ignatova has managed to elude authorities for 5 years and running at this point in not only the United States, but Europe and parts of Asia.

Whether it be OneCoin, Forsage, or various other similarly structured companies, the global reach and potential behind digital assets have clearly made DeFi a haven for predators looking to feed on the greed of others.  Pyramid and Ponzi schemes are illegal for a reason, with the vast majority of those involved getting burned along the way.  Companies preying on unsuspecting investors is common occurrence, and while hearty returns can be made with digital assets, the phrase ‘if it sounds too good to be true, it probably is’, is as relevant as ever.