SEC Charges 11 People in Alleged $300M Crypto Ponzi Scheme

A flag outside the headquarters of the US Securities and Exchange Commission in Washington, DC, USA on Wednesday, February. 23, 2022.

Al Drago | Bloomberg | Getty Images

On Monday, This was announced by the Securities and Exchange Commission. he accused 11 people of creating and promoting an allegedly fraudulent cryptocurrency pyramid and Ponzi scheme that raised over $300 million from investors.

The scheme, called Forsage, claimed to be a decentralized smart contract platform and allowed millions of retail investors to transact with the smart contracts that ran on the platform. ethereumthrone and binance blockchains. But under the hood, the SEC claims that for more than two years, the scheme functioned as a standard pyramid scheme in which investors profited by recruiting others.

The SEC statement added that Forsage operated a typical Ponzi structure in which it allegedly used the assets of new investors to pay out old ones.

“As the complaint alleges, Forsage is a pyramid scam launched on a massive scale and aggressively promoted to investors,” wrote Carolyn Welshhans, Acting Head of the SEC’s Crypto Assets and Cybersecurity Division.

“Scammers cannot circumvent federal securities laws by focusing their schemes on smart contracts and blockchains.”

Forsage, through its support platform, declined to offer a way to contact the company and did not comment.

Four of the eleven people indicted by the SEC are the founders of Forsage. Their current whereabouts are unknown, but they were last known to reside in Russia, the Republic of Georgia and Indonesia.

The SEC also indicted three US promoters who supported Forsage on their social media platforms. Their names are not mentioned in the commission’s message.

Forsage was launched in January 2020 and since then, regulators around the world have tried several times to shut it down. Discontinuance lawsuits were filed against Forsage first in September 2020 by the Philippine Securities and Exchange Commission and then in March 2021 by the Montana Securities and Insurance Commissioner. Despite this, the defendants allegedly continued to push the scheme, denying the claims in several YouTube videos and in other ways.

The two defendants, both of whom neither admitted nor denied the charges, agreed to settle the charges subject to court approval.