The SEC recently charged 11 people for allegedly inducing a fraudulent crypto Ponzi Scheme that was able to accumulate $300 million.
In 2020, Forsage was launched and promised investors opulent and lucrative deals backed by smart contracts and powered by cryptocurrencies like bitcoin and ether.
The Forsage founders Vladimir Okhotnikov, Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov, who were last located in Russia, the Republic of Georgia, and Indonesia, are accused in the SEC’s complaint.
It also charged three US-based promoters tasked with endorsing the platform on its website and social media, as well as several members of a group called Crypto Crusaders — a unit operating out of five different states that advertised the scheme.
“As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors,” Carolyn Welshhans, acting chief of the SEC’s crypto assets and the cyber unit, said in a statement.
She also added, “Fraudsters cannot circumvent the Federal Securities Laws by focusing their schemes on smart contracts and blockchains.”
SEC stated in the Court document, “It [the Forsage platform] did not sell or purport to sell any actual, consumable product to bona fide retail customers during the relevant time period and had no apparent source of revenue other than funds received from investors. The primary way for investors to make money from Forsage was to recruit others into the scheme.”
Infractions of “Unregistered Offers and Sales of Securities” under Sections 5 A and C and “Fraud” under Sections 17(a) (1 & 3) of the US Securities Act have been brought against all 11 people. Additionally, the defendants are accused of “Fraud” in violation of US Exchange Act Sections 10B and 10C.
In the Philippines, its’ Securities and Exchange Commission issued a cease-and-desist action against Forsage last September 2020.
Canada’s Commission also took similar action on Securities and Insurance around March 2021.
Afterword
This Ponzi scheme tells a cautionary tale that modern investment instruments are vulnerable to the old tricks.
And unless we do not balance the decentralization of these types of systems, we cannot rest assured that this will stop from there, nor will the amount be the highest.
