SEC Charges 11 People In $300M Crypto Ponzi Scheme

  • The Securities and Exchange Commission has charged 11 people for their roles in creating and promoting an allegedly fraudulent crypto-focused pyramid & Ponzi scheme that raised more than $300 million from investors.
  • Forsage scheme allowed retail investors to enter transactions via smart contracts that operated on the Ethereum (ETH/USD), Tron (TRX/USD), and Binance (BNBT/USD) blockchains.
  • The SEC alleges that the setup functioned like a standard pyramid scheme for more than two years, in which investors earned profits by recruiting others into the operation. 
  • The agency also alleges that Forsage used assets from new investors to pay earlier investors in a typical Ponzi structure.
  • “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.
  • “Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains.”
  • Four of the eleven individuals charged by the SEC are founders of Forsage who were last known to be living in Russia, the Republic of Georgia, and Indonesia.
  • The SEC has also charged three U.S.-based promoters who endorsed Forsage on their social media platforms. T
  • Forsage was launched in January 2020, and regulators worldwide have tried several times to shut it down. Cease-and-desist actions were brought against Forsage in September 2020 by the Securities and Exchange Commission of the Philippines and later, in March 2021, by the Montana commissioner of securities and insurance.

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