Forsage: the "Decentralized" smart contract that turned out to be a $340 million pyramid scheme

The project presented itself as something fundamentally new for the crypto market — a supposedly fully decentralized smart contract that operated without management, without an office, and beyond the reach of any regulation. This wrapper of technological independence concealed an entirely familiar pyramid mechanism, which over the course of a few years extracted hundreds of millions of dollars from investors around the world.

Forsage launched with the idea of a "matrix" smart contract on a blockchain network: participants deposited cryptocurrency and recruited new people, while the distribution of funds among the members of the chain happened automatically through code, which supposedly eliminated the human factor and any possibility of fraud. This framing of technological neutrality — "it's not us, it's just a smart contract" — became the main instrument of trust: registration required no documents, and the marketing materials emphasized "decentralization" as a guarantee of legality.

However, according to the investigation, participants' profits were generated solely through the recruitment of new people into the structure — the smart contract merely automated the distribution of funds in a pyramid model and generated no real economic value whatsoever. The total amount collected from investors around the world was estimated by investigators at between $300 and $340 million.

In August 2022, the U.S. Securities and Exchange Commission (SEC) brought civil charges against eleven individuals, including four founders of the project and a network of American promoters. In February 2023, the U.S. Department of Justice added criminal charges to these. One of the founders, Vladimir Okhotnikov, was sentenced in absentia in 2024 by a Tbilisi court to 10 years in prison for laundering funds connected to the project, and he remains wanted to this day.

Co-founder Olena Oblamska, known by the alias "Lola Ferrari," was arrested in Thailand and extradited to the United States, where she appeared in court and pleaded not guilty; her case, like those of others involved in the project, is pending, and no final verdict has been handed down against her as of now.

Published 7 February 2023