On August 01, the Securities and Exchange Commission (SEC) of the United States charged 11 individuals for promoting and participating in a crypto pyramid scheme named Forsage, through which they managed to receive more than 300 million dollars globally.
The SEC reports that the defendants involve 4 founders who were last seen in Russia and 3 promoters who are in the U.S., among other members of the Crypto Crusaders group, who were engaged in stimulating the Ponzi scheme.
Forsage Worked as a Crypto Pyramid Scheme for 2 Years
Forsage was created under the assumption of working as a bridge between Ethereum, Tron, and Binance. The platform was presumed to make it possible to implement smart contracts across different chains. Regardless, it operated as a crypto pyramid scheme for two years, utilizing the money from new investors to pay old ones and reward those who recruited more individuals.
The SEC had mailed cease and desist letters to Forsage in late 2020 and March 2021. However, the platform’s founders chose to overlook regulators and instead kept refusing the crypto fraud allegations through their YouTube accounts while continuing to encourage the use of the platform.
Carolyn Welshhans, Acting Chief of the SEC’s Crypto Assets and Cyber Unit, stated that the Fraudsters cannot bypass the federal securities laws by focusing their schemes on smart contracts and blockchains, and harming retail investors who put their savings in this type of platform counting on the promoters’ promises.
For now, two of the US-based defendants settled to pay disgorgement and civil penalties as determined by the court to determine the charges imposed by the SEC, being cleared of any further offenses.
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