SEC Charges 11 People in $300 Million Forsage Crypto Pyramid and Ponzi Scheme – Regulation Bitcoin News

The U.S. Securities and Exchange Commission (SEC) has charged four founders and seven promoters of Forsage, which it described as “a fraudulent crypto pyramid and Ponzi scheme.” The scheme allegedly raised more than $300 million from millions of retail investors worldwide, including in the U.S.

SEC Acts Against Forsage Crypto-Scheme

The U.S. Securities and Exchange Commission (SEC) announced Monday that it has “charged 11 individuals for their roles in creating and promoting Forsage, a fraudulent crypto pyramid and Ponzi scheme.” The securities regulator explained that the Forsage scheme raised more than $300 million from millions of retail investors worldwide, including in the U.S.

The 11 defendants are four Forsage founders, three U.S.-based promoters of the scheme, and “several members of the so-called Crypto Crusaders — the largest promotional group for the scheme that operated in the United States,” the SEC described. According to the SEC, they were living at the time in Russia and Indonesia.

According to the securities watchdog, Jane Doe (aka Lola Ferrari), Mikhail Sergeev and Sergey Maslakov started the website January 2020 in order to let retail investors enter transactions through smart contracts using the Ethereum, Tron and Binance blockchains.

However, Forsage investors earned profits by recruiting others into the scheme, the SEC said, noting that “Forsage also allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure.”

Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber Unit, commented:

According to the complaint, Forsage was a pyramid scheme that is fraudulent and was aggressively promoted to investors.

Forsage has been stopped from operating within their jurisdictions by regulators. Forsage was stopped by the Securities and Exchange Commission of the Philippines in September 2020. In March 2021, the Montana Commissioner of Securities and Insurance filed a cease-and DESIST order against the scheme. Forsage, however continued operations and denied the accusations in Youtube videos.

The SEC charged the defendants “with violating the registration and anti-fraud provisions of the federal securities laws,” the regulator noted, adding that it “seeks injunctive relief, disgorgement, and civil penalties.”

The charges against two of the accused promoters have been settled without them admitting to or denigrating the claims. They are required to disgorge and pay civil penalties. Both settlements require court approval.

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What do you think about the SEC taking action against Forsage’s founders and promoters? Leave your comments below.

Kevin Helms

Kevin, a student of Austrian Economics and a Bitcoin evangelist since 2011, was one of the first to discover Bitcoin. He is interested in Bitcoin security and open-source software, network effects, and the intersection of cryptography and economics.

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