On Monday, the Securities and Exchange Commission charged 11 people as part of an alleged $300 million global crypto pyramid and Ponzi scheme.
Retail investors were allegedly bilked by Forsage, which claims to be a decentralized smart contract platform, the SEC said. The four founders of the company, who were last known to be living in Russia, the Republic of Georgia, and Indonesia, were charged, as were three U.S.-based promoters who endorsed Forsage on its website and social media platforms. Several are members of the so-called Crypto Crusaders, a promotional group for the alleged scheme that operated in at least five U.S. states.
"As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors," said Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber Unit.
Forsage could not be reached for comment.
Forsage was launched in January 2020 by Vladimir Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov, allowing retail investors to enter into transactions via smart contracts that operated on the Ethereum, Tron and Binance blockchains. The SEC complaint alleges that Forsage actually operated as a pyramid scheme with investors profiting by recruiting others into the scheme. They also allegedly used assets from new investors to pay earlier investors.
Two defendants who did not admit or deny the allegations agreed to settle the charges. Both settlements are subject to court approval.
Officials in the Philippines and Montana filed cease and desist orders against Forsage for operating as a fraud over the past two years to no effect. The defendants allegedly continued to promote the scheme while denying the claims in YouTube videos.
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