In a statement released Wednesday, the U.S. Department of Justice charged the four founders of Forsage, a decentralized financial investment platform: Vladimir Okhotnikov, Olena Oblamska, Mikhail Sergeev and Sergey Maslakov advertised on social media that the Forsage investment was profitable, but it was essentially a Ponzi scheme involving as much as $340 million.

According to the Justice Department's statement, Forsage uses smart contracts on Ethereum, Binance Smart Chain, and Tron, "which are consistent with the characteristics of a Ponzi scheme, that is, once an investor invests in Forsage by purchasing 'slots' in Forsage smart contracts, ForSage will be able to invest in ForSage." The smart contract will then automatically transfer investors' funds to other Forsage investors, using the funds put in by later investors to repay the profits of earlier investors."

In November, the US Securities and Exchange Commission charged 11 people associated with Forsage with fraud. The SEC charged them with selling unregistered securities and running a Ponzi scheme.

Fraud in the cryptocurrency industry has become increasingly rampant, and the Forsage case is just a small part of the cloud hanging over the entire industry. Regulators and law enforcement agencies are stepping up efforts to combat fraud and scams, especially in the DeFi space.