Feds discover DeFi’s alleged $340 million Ponzi scheme

The US regulatory authorities have set their sights on the DeFi sector after recent allegations of fraud emerged. Four Russian individuals have been accused of operating a Ponzi scheme on the blockchains of BNB, Ethereum, and Tron, with an estimated value of $340 million. The alleged scam operated on a pyramid-scheme-like process, where new investors’ funds were utilized to pay off old investors, leading to a systematic Ponzi pyramid scheme. The accused have been charged with conspiracy to commit wire fraud.

Forsage Founders Accused of Operating a Ponzi Pyramid Scheme

The founders of Forsage, a decentralized cryptocurrency network, have been accused of operating a Ponzi pyramid scheme. It has been revealed that 80% of investors received fewer ETH, while 50% never received a payout. The US Justice Department has charged the defendants with conspiracy to commit wire fraud, alleging that almost the entire fund was directed to members whose projects had zero risk, despite promoting the platform as legitimate and low-risk. The federal grand jury in Oregon is now handling the matter, and the platform could lose its standing in the community and its ability to work with the government.

US Regulators Tighten Their Grip on the Crypto Industry

The collapse of centralized exchange FTX has led US regulators to tighten their grip on the crypto industry to protect the interests of retail investors. The recent fraud allegations in the DeFi sector and the Forsage Ponzi scheme have given regulators a chance to further widen their investigation into the crypto space. The regulators are strengthening their hold over the industry to ensure that customers have their funds secured in case of a decline in platform operations. They are also expanding their coverage to ensure that partnerships in the industry are reliable instead of being there for the sake of being there. The $340 million fraud raises questions about how decentralized these platforms should be and how much liberty they should be given.

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