The U.S. Securities and Exchange Commission (SEC) has charged 11 people for their involvement in an allegedly fraudulent cryptocurrency pyramid scheme that raised more than $300 million U.S. from investors.
The scheme, called “Forsage,” claimed to be a decentralized smart contract platform, and it allowed millions of individual investors to enter into transactions via smart contracts that operated on the Ethereum (ETH), Tron and Binance blockchains.
However, the SEC claims that the platform operated like a conventional pyramid scheme in which investors earned profits by recruiting other people into the operation.
The SEC complaint calls Forsage a “textbook pyramid and Ponzi scheme,” and says the people behind the platform aggressively promoted its smart contracts online, while not selling any actual product.
The complaint by the Wall Street regulator adds that “the primary way for investors to make money from Forsage was to recruit others into the scheme.”
In a media statement, the SEC said that Forsage operated like a typical Ponzi scheme in which it used money from new investors to pay earlier ones.
Four of the eleven individuals charged by the SEC are founders of Forsage. Their current whereabouts are unknown, but they were last known to be living in Russia and Indonesia.
The SEC has also charged three U.S.-based promoters who endorsed Forsage on various social media platforms.
Forsage launched in January 2020, and regulators around the world had tried multiple times to shut it down. However, despite best efforts, the defendants in the SEC case allegedly continued to promote the scheme while denying the claims against them.
