SEC sues Ponzi scheme Forsage, Vitalik digs up old tweets: It's right to condemn fraud

11 people involved in creating and promoting the infamous Ponzi scheme project Forsage, which raised over $300 million globally including in the United States, are now facing a lawsuit filed by the U.S. Securities and Exchange Commission (SEC). Upon hearing the news, Ethereum co-founder Vitalik Buterin opened an old post and stated: "Call out the scammers. You will be hated on at the moment, but time will prove you right."

Smart Contract Ponzi Scheme: Forsage

When Forsage was launched in 2020, its smart contract was already marked as "fraudulent" by major data websites, yet it frequently ranked high in Ethereum Gas Fee usage in 2020. Introduced in January 2020, Forsage supports Ethereum, TRON, and BNB Chain. Participants can profit based on the smart contract rules by recruiting more people, operating under a typical "pay the later joiners with the money from the earlier joiners" structure.

The SEC recently accused the four founders of Forsage and eleven other global team members involved in its creation and promotion, residing in Russia, Georgia, Indonesia, and the United States. The project faced fraud charges in the Philippines and Montana, U.S. in 2020 and 2021, respectively, but the defendants have not ceased their promotional activities.

SEC officials stated that Forsage is a large-scale Ponzi scheme actively promoted to investors. Even when fraudsters conduct schemes using smart contracts and blockchain, they cannot evade federal securities laws.

Two U.S. defendants have agreed to surrender illegal gains and fines, but SEC seems to be unable to locate the four overseas founders Vladimir Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov.

Today we charged 11 individuals for their roles in creating and promoting Forsage, a fraudulent crypto pyramid and Ponzi scheme that raised more than $300 million from millions of retail investors worldwide, including in the United States.

— U.S. Securities and Exchange Commission (@SECGov) August 1, 2022

Vitalik Criticizes Fraud in Old Tweets

Ethereum co-founder Vitalik revisited his tweets from 2020, where he condemned Forsage as a scam similar to past frauds like Bitconnect and Onecoin. He highlighted that without new participants, most users would incur financial losses and urged them to leave Ethereum.

Vitalik said, "Call out scammers. You'll be hated for a moment, but time will prove you right." He believed that all reputable CEOs should speak out directly, as people will pay attention to and value your warnings.