SEC Charges 11 People in $300 Million Crypto Ponzi Scheme

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

Al Drago | Bloomberg | beautiful pictures

In Monday, Securities and Exchange Commission said it charged 11 people for their role in creating and promoting an alleged crypto pyramid scam and Ponzi scheme that raised over $300 million from millions of retail investors worldwide, including in the United States.

The plan, called Forsage, claims to be a decentralized smart contract platform and it allows millions of retail investors to participate in trades through smart contracts that work on the blockchain. ethereumtron, and binance blockchains. However, the SEC alleges that for more than two years, the setup operated like a standard pyramid scheme, in which investors earned profits by recruiting others into the operation.

In a statement, the SEC added that Forsage operated a typical Ponzi scheme in which it allegedly used assets from new investors to pay out previous investors.

Carolyn Welshhans, acting director of the SEC’s Crypto Assets and Networks Unit, said: “As the lawsuit alleges, Forsage is a massively deployed and heavily marketed fraudulent pyramid scheme for the investors.

Fraudsters cannot circumvent federal securities laws by focusing their plans on smart contracts and blockchain.

Forsage, through its support platform, declined to provide a method of contacting the company and was not available for comment.

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

The SEC has also charged three US-based promoters with endorsing Forsage on their social media platforms. They are not named in the SEC release.

Forsage was launched in January 2020, and regulators around the world have attempted to shut it down a few times since. The cease and desist actions were brought against Forsage first in September 2020 by the Securities and Exchange Commission of the Philippines, and then, in March 2021, by the Montana Securities and Insurance Commissioner . Despite this, the defendants allegedly continued to promote the scheme while denying claims in several YouTube videos and other media.

Two of the defendants, neither admitting nor denying the charges, agreed to settle the charges, subject to court approval.

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