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

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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 Takes Action 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. The founders were last known to be liv­ing in Rus­sia, the Repub­lic of Geor­gia, and Indonesia.

The secu­ri­ties watch­dog detailed that Vladimir Okhot­nikov, Jane Doe (aka Lola Fer­rari), Mikhail Sergeev, and Sergey Maslakov launched the Forsage.io web­site in Jan­u­ary 2020 to allow retail investors to enter into trans­ac­tions via smart con­tracts on 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:

As the com­plaint alleges, For­sage is a fraud­u­lent pyra­mid scheme launched on a mas­sive scale and aggres­sive­ly mar­ket­ed to investors.

Some reg­u­la­tors have tried to stop For­sage from oper­at­ing in their juris­dic­tions. The Secu­ri­ties and Exchange Com­mis­sion of the Philip­pines launched cease-and-desist actions against For­sage in Sep­tem­ber 2020 and the Mon­tana Com­mis­sion­er of Secu­ri­ties and Insur­ance took action against the scheme in March 2021. How­ev­er, For­sage con­tin­ued its oper­a­tions, deny­ing the alle­ga­tions 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.”

Two of the pro­mot­ers charged already agreed to set­tle the charges with­out admit­ting or deny­ing the alle­ga­tions. They will be required to pay dis­gorge­ment and civ­il penal­ties. Both set­tle­ments are sub­ject to court approval.

Tags in this story
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What do you think about the SEC tak­ing action against Forsage’s founders and pro­mot­ers? Let us know in the com­ments sec­tion below.

Kevin Helms 

A stu­dent of Aus­tri­an Eco­nom­ics, Kevin found Bit­coin in 2011 and has been an evan­ge­list ever since. His inter­ests lie in Bit­coin secu­ri­ty, open-source sys­tems, net­work effects and the inter­sec­tion between eco­nom­ics and cryptography.




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