Crypto Pyramid Scheme: US SEC Charges 11 Individuals In $300-Million Scam

The SEC complaint also noted that Forsage allegedly used assets from new investors to pay earlier investors.

Two of the defendants have agreed to settle charges and one of them agreed to pay penalties.

Cryptocurrencies are slowly gaining recognition around the world as lucrative investment opportunities. Unfortunately, the growing popularity has also led to a rise in scams involving crypto coins. On August 1, the US Securities and Exchange Commission (SEC) said that it has charged 11 people for their roles in creating and promoting a fraudulent crypto pyramid and Ponzi scheme, raising over $300 million across the globe. As reported by Reuters, the individuals charged included the four founders of the scheme, called Forsage.

The SEC said in its statement that the founders were last known to be residing in Russia, Indonesia, and the Republic of Georgia. The Forsage website was launched in January 2020, as per SEC’s complaint. It reportedly allowed millions of investors to enter into transactions via ‘smart contracts’. In its nearly two-year-long operation as a pyramid scheme, investors earned profits by recruiting others.

ALSO SEE: Indian Crypto Investors Duped Of Rs 1,000 Crore By Fake Exchanges: CloudSEK

The complaint also noted that Forsage allegedly used assets from new investors to pay earlier investors. Carolyn Welshhans, acting chief of the SEC's Crypto Assets and Cyber unit, said, “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.”

The SEC added that two of the defendants have agreed to settle charges and one of them agreed to pay penalties, without admitting or denying the allegations. 

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Cryptocurrency is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Cryptocurrency market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.