On August 1, 2022 the US Securities and Exchange Commission brought a lawsuit alleging that Forsage was a fraudulent crypto scheme.

According to the Complaint, Defendants Vladimir “Lado” Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikail “Mike” Sergeev, and Sergey Maslakov (the founders of Forsage) created, operated and maintained an online pyramid and Ponzi scheme through Forsage.io (“Forsage”), a website that allowed millions of retail investors in the United States and elsewhere to enter into transactions via smart contracts created by the founders that operated on the Ethereum, Tron, and Binance blockchains. To date, these transactions have totaled over $300 million. The Founders perpetuated Forsage and its smart contracts through aggressive online promotions and continuous development of new investment platforms. During the relevant time period, the Founders raised funds from retail investors in the United States and across the world through the unregistered offer and sale of securities in Forsage. In connection with the offer and sale of those securities, the Founders engaged in a scheme to defraud investors.

During the relevant time period, as alleged by the SEC, Forsage used algorithmic contracts (“smart contracts”) to direct funds to an investor as additional investors were recruited into the scheme. The smart contracts allocated payments automatically to investors’ crypto-asset wallets, to which Forsage assigned sequential identification numbers (“Forsage ID”). The lower the Forsage ID, the earlier an investor joined Forsage.  To purchase a slot in any Forsage smart contract, an investor created his or her own crypto-asset wallet and populated it with funds in the form of the applicable crypto-asset token: Ethereum (Eth), Tron (TRX) or Binance (BUSD). The investor then directed payment of funds from the wallet to a Forsage smart contract on the corresponding blockchain. As soon as payment was made to the smart contract, the investor relinquished all control over where the investment was distributed, and the transfer of funds was irrevocable. The smart contract automatically routed the funds to other investors’ wallet addresses according to the algorithm coded by the Founders. These distributions constituted the compensation paid to an investor and took the form of (i) payments made to an investor by downlines recruited by the investor; and (ii) profit sharing in the form of spillover payments from other investors in the larger Forsage network (which were payable to investors even if they did not recruit any downlines).

Based on this structure, the complaint said that:

Forsage is a textbook pyramid and Ponzi scheme. It did not sell or purport to sell any actual, consumable product to bona fide retail customers during the relevant time period and had no apparent source of revenue other than funds received from investors. The primary way for investors to make money from Forsage was to recruit others into the scheme.

The SEC also alleged that the Securities and Exchange Commission of the Philippines took cease-and-desist actions in September 2020 and the Montana Commissioner of Securities and Insurance did the same in March 2021. Nevertheless, the defendants allegedly continued to promote the scheme while denying the claims in several YouTube videos and by other means.

The four founders of Forsage, were last known to be living in Russia, the Republic of Georgia, and Indonesia.  Also charged were three U.S.-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 that operated in the United States from at least five different states.  The Defendants are charged with violating the registration and anti-fraud provisions of the federal securities laws; the SEC is seeking injunctive relief, disgorgement, and civil penalties.  Two defendants settled without admitting liability.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.