Eleven Charged In Huge $300M Blockchain Pyramid Scheme As Crypto Continues To Crumble

Financial regulators in the US have been reluctant to come down on cryptocurrency for fear of stifling innovation, but there's nothing innovative about Forsage. The Securities and Exchange Commission (SEC) has filed charges against 11 individuals for running and promoting Forsage, which the SEC says is a "textbook pyramid and Ponzi scheme."

Forsage operated on the Ethereum, Tron, and Binance blockchains, inviting users to invest in so-called smart contracts via aggressive online marketing. The service launched in early 2020, and even casual observers online called it out as a pyramid scheme at the time. Forsage did not have any way to create value and, as the SEC notes in its announcement of charges, all the payouts from Forsage came from the cryptocurrency put in by new investors. The scam allegedly bilked investors all over the world (including in America) out of $300 million.

Those charged include four founders of Forsage—Vladimir Okhotnikov, Jane Doe (known online as Lola Ferrari), Mikhail Sergeev, and Sergey Maslakov. The fact that we don't even know one of the founders' names is a clue that prosecuting these crimes will be difficult. The founders were last known to be in countries like Russia and the Republic of Georgia, putting them well outside the reach of American law enforcement. The SEC also indicted several official promoters of Forsage, known (embarrassingly) as "Crypto Crusaders." Two of them, Samuel Ellis and Sarah Theissen, have settled with regulators. They have agreed to limit their future activities and, of course, to avoid violating securities law again.


Was all that fraud worth it? Anyone who did get a big payday from Forsage is much less rich today than they were a few months ago. The value of cryptocurrency fell off a cliff earlier this year following the collapse of a "stablecoin" called Terra. This, in turn, caused the value of Bitcoin, Ethereum, and other coins to plummet. Bitcoin went from a high of more than $60,000 per coin in early 2022 to less than $20,000 in June. It has since rebounded several thousand, but the damage is done.

Major crypto players have been burned by the downturn, including lending platform Celsius, which stopped withdrawals and has now filed for bankruptcy. The drop in value could expose more schemes for what they are—hopefully, the SEC is watching the latest developments, and the Forsage charges will not be the last.