SEC accuses 11 individuals in $300M crypto pyramid and Ponzi scheme

SEC accuses 11 individuals in $300M crypto pyramid and Ponzi scheme

The US Securities and Exchange Commission (SEC) has reportedly indicted 11 individuals for their roles in developing and promoting a fraudulent Blockchain networking platform, Forsage, and a Ponzi scheme that recently secured around $300 million from several retail investors worldwide, including in the US.

The people charged included four founders of Forsage, who were earlier said to be living in Russia, Indonesia, and the Republic of Georgia, along with three US-based promoters associated with the founders for endorsing Forsage on its website and social media platforms.

Additionally, several members of the so-called Crypto Crusaders, one of the significant promotional groups for the scheme that functioned in the United States from at least five states, were also charged.

The SEC’s complaint states that in January 2020, Jane Doe a/k/a Lola Ferrari, Vladimir Okhotnikov, Sergey Maslakov, and Mikhail Sergeev unveiled Forsage.io, a website that empowers millions of retail investors to enter transactions using smart contracts that operated on the Tron, Ethereum, and Binance blockchains.

Evidently, Forsage has operated as a pyramid scheme for more than two years in which investors make profits by employing others in the scheme.

As per reports, Forsage allegedly used assets from new investors to pay the earlier investors in a standard Ponzi structure.

The defendants, even after being charged with cease-and-desist actions for operating a fraud in September 2020 by the SEC of the Philippines and in March 2021 by the Montana Commissioner of Securities and Insurance, continued to promote the scheme while contradicting the claims via the medium of several YouTube videos and others.

Carolyn Welshhans, Acting Chief of SEC’s Crypto Assets and Cyber Unit, described Forsage as an illegal pyramid scale that debuted on a massive scale and marketed aggressively to investors. Fraudsters cannot circumvent federal securities laws using smart contracts and blockchains, she said.

Source Credit - https://www.sec.gov/news/press-release/2022-134