SEC Charges 11 in Crypto Ponzi and Pyramid Scheme

The U.S. Securities and Exchange Commission (SEC) announced on Monday that it had charged 11 people for their roles in what the agency is calling a “fraudulent crypto pyramid and Ponzi scheme” that raised over $300 million from retail investors across the world.

Those charged include the four founders behind the scheme, named Forsage. The accused were last known to be living in the Republic of Georgia, Indonesia, and Russia, the SEC said in a statement. Forsage allegedly raised more than $300 million from retail investors across the globe per the SEC’s statement. According to Carolyn Welshhan, acting chief of the SEC’s Crypto Assets and Cyber Unit who led the investigation,

As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors. Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains.

According to the SEC’s complaint, the scheme launched its website in January 2020 and allowed millions of retail investors to enter transactions via smart contracts. It operated its scheme for more than two years in which investors earned profits by recruiting others into the scheme. The SEC complaint added that Forsage used assets from new investors to pay earlier investors in the typical style of a Ponzi scheme.

Forsage has a YouTube channel with over 170,000 views and roughly 6,500 subscribers. It includes videos of people talking about how their lives have been improved by the website. Forsage’s website also claims to have brought over two million participants. It says that in the past day, 2,500 people have joined the website and that members have been rewarded with over $1.35 billion in value since the website was launched.

According to the SEC complaint, without admitting or denying the allegations, two of the defendants agreed to settle the charges and to be permanently enjoined from future violations of the charged provisions and certain other activities.

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