Friday, October 7, 2022

SEC Charges 11 people in $300 Million Crypto Pyramid Scheme

At least 11 individuals have been identified by the U.S Securities and Exchange Commission (SEC) for the roles they played in a crypto pyramid scheme Forsage. According to a Monday statement, the crypto regulator is charging the culprits about a 2-year-long scheme which saw them obtain over $300 million from unsuspecting investors from around the world.

Cease and desist notices

The crypto regulator claims it is charging Forsage’s founding members and some others for knowingly promoting a typical ‘ponzi’ scheme. Most of the founders were recently living in Russia, the Republic of Georgia, and Indonesia. But the SEC also believes that some three U.S.-based promoters were hired to promote Forsage on their website and social media.

Meanwhile, before now, Forsage had initially been contacted by the Philippine SEC to stop its fraudulent dealings. That was as early as September 2020.  A few months later, precisely March 2021, the Montana Commissioner of Securities and Insurance, also slammed the firm with another cease-and-desist order. 

As it turns out, however, Forsage kept on doing business, denying fraud claims and putting out several YouTube videos to counter those claims. It even went as far as hosting various ‘fake’ testimonies on its official YouTube channel. 

Crypto pyramid scheme exposed

By all ramifications, Forsage allegedly paid old investors with the deposits made by new investors. And per the SEC, that is exactly what Ponzi schemes are all about. That is, users are usually encouraged to recruit others while they themselves gradually climb up in the pyramid.

Forsage always insisted that it had nothing to sell. Therefore, the firm managed to convince its users that the only way to make money on its platform is to bring in others.

Speaking about the whole incident, the Acting Chief of the SEC’s Crypto Assets and Cyber Unit,  Carolyn Welshhans says:

“Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors.”

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