The Securities and Exchange Commission (the American Consob) filed a complaint accusing 11 people for their role in creating and promoting an alleged fraudulent pyramid scheme focusing on cryptocurrencies which it has raised over 300 million dollars from investors.
The scheme, called Forsakenclaimed to be a decentralized smart contract platform and enabled millions of retail investors to transact via smart contracts operating on blockchains.i ethereum, tron e binance. But under the hood, the SEC found, for more than two years, the organization functioned as a pyramid scheme, in which investors made profits by recruiting others into the deal.
In the formal complaint the SEC defines Forsaken a “Textbook pyramid and a Ponzi scheme”in which Forsage aggressively promoted their smart contracts through online promotions and new investment platforms, while not selling all the time “No real consumer product.” The complaint states that “the main way for investors to make money at Forsage was to recruit others into the program. ”
In a note, the SEC added that Forsage ran a typical Ponzi facility, in which he would use the assets of new investors to pay for previous ones.
“As the complaint claims, Forsage is a large-scale fraudulent pyramid scheme launched and aggressively marketed to investors”he wrote Carolyn Welshhansacting head of the SEC’s Crypto Assets and Cyber Unit. “Scammers cannot circumvent federal securities laws by focusing their schemes on smart contracts and blockchains.”
The SEC charges eleven individuals in connection with the Ponzi scheme
Four of the eleven individuals accused by the SEC are the founders of Forsage. Their current whereabouts are unknown, but according to the latest available information they live in Russia, the Republic of Georgia and Indonesia. The SEC also charged three US-based promoters who endorsed Forsage on their social media platforms. They were not named in the commission’s release.
Forsage was launched in January 2020, regulators around the world have tried a couple of times to shut it down. The first actions to stop Forsage’s activities were carried out in September 2020 by the regulators of the Philippines. Despite this, the defendants would continue to promote the scheme by denying the claims in several YouTube videos and by other means.