Forsage 'Matrix' Smart Contract Ponzi Scheme: A $340 Million On-Chain Trap

Who Gets Targeted

The victims primarily fall into three categories: First, young to middle-aged retail investors with limited understanding of blockchain fundamentals who are attracted by the narrative of 'automated smart contract execution and immutable returns,' often possessing a 'technological faith' that open-source code equals security. Second, individuals in lower-tier markets recruited into Telegram groups by acquaintances, lacking financial literacy and swayed by 'passive income' narratives promising 'thousands per month for a few minutes of work.' Third, early participants who knowingly joined a Ponzi scheme but invested more, driven by the 'get out before the house does' mentality. Their common weakness is mistaking 'verifiable on-chain records' for 'credible legal commitments,' while ignoring the source of cash flow and the inherent flaws of the Ponzi model.

骗局怎么运作

• Step 1: Building the 'Matrix' contract. Forsage deployed smart contracts named X3 and X4 on Ethereum and Binance Smart Chain, organizing participants into 3×3 and 4×4 hierarchical matrices. The code is open-source, and the team claims 'code is law,' asserting that all distribution rules are written on-chain and cannot be tampered with, establishing an initial image of 'technological neutrality and trustlessness.'
• Step 2: Designing the 'pull-up, fill-down' deposit model. New users must transfer an 'activation fee' ranging from 0.05 to 0.5 ETH to the contract address, which is then automatically distributed to upline referrers at various levels according to preset ratios. The contract contains no actual investment assets or business revenue, relying solely on the principal of new entrants to pay the returns of earlier ones—a mechanical replica of a classic Ponzi structure on a smart contract.
• Step 3: Packaging the 'Decentralized Autonomous Organization' narrative. Operators emphasize that the project has no central server, no corporate entity, and that developers 'cannot run away,' citing early quotes from Vitalik Buterin on on-chain autonomy to prove 'compliance.' They also use YouTube and Telegram channels to post numerous 'profit screenshots' and 'success stories' to create a wealth effect.
• Step 4: Viral recruitment and localized operations. The team establishes local communities worldwide, incentivizing old members to recruit others through 'referral commissions + team-based compensation.' For the Chinese market, they produce Chinese tutorials emphasizing 'early participation leads to early break-even' and arrange for 'team leaders' to livestream withdrawal processes in groups to reinforce herd mentality.
• Step 5: Inducing reinvestment and lock-ups. Once early members profit, operators launch 'reinvestment doubling' or 'high-level matrix' campaigns, encouraging members to reinvest profits into higher-level matrices while extending the payout cycle, effectively delaying payment pressure and sustaining the cash flow.
• Step 6: Collapse and judicial accountability. When the growth of new deposits slows and the capital chain breaks, members are unable to withdraw funds. Operators claim 'contract failure' or 'technical issues' before shutting down the community. The U.S. Securities and Exchange Commission (SEC) and the FBI intervened, classifying it as a Ponzi scheme and filing criminal charges for wire fraud against the founding team.

红旗信号（看到这些快跑）

• 🚩 Promises dual-track returns of 'static income + dynamic referral bonuses,' with yields far exceeding risk-free market levels, where all returns originate from new member deposits.
• 🚩 Publicly promotes 'decentralization and immutable smart contracts' while refusing to disclose any actual operating entity, audit reports, or sources of business revenue.
• 🚩 Communities are flooded with 'profit' and 'withdrawal' screenshots, but members are prohibited from discussing project risks or raising questions, with dissenters being removed from groups.
• 🚩 Requires purchasing cryptocurrency (e.g., ETH, BNB) before transferring to a designated contract address, with entry thresholds as low as a few dozen dollars, targeting 'small-amount testing' to lower defenses.
• 🚩 Official channels are limited to encrypted platforms like Telegram and YouTube, with no company registration information, office address, or customer service phone number; all communication is conducted via anonymous accounts.

真实案例

• In August 2024, the U.S. Department of Justice announced that one of the Forsage co-founders, a Russian national, was extradited from Thailand to the U.S. to stand trial, where he pleaded not guilty to conspiracy to commit wire fraud. The case involves approximately $340 million and affects over 2 million participants worldwide. (Source: https://soaringcrowz.substack.com/p/forsage-ponzi-scheme-vitalik-fbi)
• In 2022, the U.S. Securities and Exchange Commission filed a lawsuit against Forsage and its founding team, alleging they operated a global Ponzi scheme executed through Ethereum and Binance Smart Chain smart contracts. The SEC had already filed civil fraud charges in 2022 against 11 individuals associated with Forsage, including four founders and multiple U.S.-based promoters. (Source: https://license.aiying.cc/zh-CN/us/forsage-cofounder-extradited-thailand-ponzi-compliance/)
• In October 2020, as reported by ChainCatcher and reprinted by BitFun, the Ethereum-based Ponzi scheme Forsage entered the Chinese market, with the total number of participating addresses exceeding 1.1 million. The matrix-style smart contract used high static returns as bait to develop hierarchies, after which the U.S. SEC and DOJ successively filed fraud charges and issued warnings.

Official Stance

• On February 3, 2022, the U.S. Securities and Exchange Commission (SEC) issued a press release announcing charges against Forsage and its founders for operating a crypto Ponzi scheme involving millions of investors.
• On February 4, 2022, the FBI's Internet Crime Complaint Center (IC3) issued a public warning, alerting investors to the characteristics of Forsage's smart contract-based Ponzi scheme.
• In August 2024, the U.S. Department of Justice (DOJ) issued a statement confirming the extradition of a Forsage co-founder from Thailand to the U.S. to face conspiracy to commit wire fraud charges, warning of the criminal enforcement risks associated with such cross-border DeFi scams.

How to Protect Yourself

• ✅ Maintain zero tolerance for any crypto project promising 'guaranteed returns + referral commissions,' regardless of whether it uses smart contracts or open-source code; the nature of a Ponzi scheme remains unchanged.
• ✅ Verify whether the project has real underlying business assets or external revenue; if the source of returns points only to 'new member deposits,' withdraw immediately and report to the authorities.
• ✅ Use blockchain explorers (e.g., Etherscan) to check the flow of funds in the contract address; if large amounts of funds are transferred to exchanges or developer wallets rather than being used for 'dividends,' it is a high-risk signal.
• ✅ Before participating in any crypto investment, check the warning lists on the websites of the U.S. SEC, the FBI, and your local financial regulatory authorities; Forsage has been flagged in multiple countries.