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SEC Charges 11 People in $300 Million Prosecution Crypto Pyramid and Ponzi Scheme – Regulation Bitcoin News
The US 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 reportedly raised more than $300 million from millions of retail investors worldwide, including in the U.S.
SEC Takes Action Against Forsage Crypto Scheme
The US Securities and Exchange Commission (SEC) announced on Monday that it has “charged 11 individuals for their roles in creating and promoting Forsage, a bogus crypto pyramid and Ponzi scheme.” The Securities and Exchange Commission 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 US-based promoters of the scheme, and “several members of the so-called Crypto Crusaders – the largest campaign group for the scheme operating in the US,” the SEC described. The founders were last known to live in Russia, the Republic of Georgia and Indonesia.
The securities watchdog described that Vladimir Okhotnikov, Jane Doe (aka Lola Ferrari), Mikhail Sergeev and Sergey Maslakov launched the website Forsage.io in January 2020 to allow retail investors to transact via smart contracts on the Ethereum, Tron and Binance blockchains.
However, Forsage investors made profits by recruiting others into the scheme, the SEC said, noting that “Forsage also allegedly used assets from new investors to pay off previous investors in a typical Ponzi structure.”
Carolyn Welshhans, acting head 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 initiated 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 to operate and denied the allegations in Youtube videos.
The SEC accused the defendants “of violating the registration and anti-fraud provisions of the federal securities laws,” the regulator noted, adding that it is “seeking injunctive relief, bankruptcy and civil penalties.”
Two of the accused organizers have already agreed to settle the charges without admitting or denying the allegations. They will be required to pay disgorgement and civil penalties. Both settlements must be approved by the court.
What do you think about the SEC taking action against Forsage’s founders and promoters? Let us know in the comments section below.
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