US authorities have busted a massive cryptocurrency pyramid scheme, accusing eleven individuals with defrauding retail investors of more than $300 million globally.
Monday, the US Securities and Exchange Commission (SEC) announced charges related to a Ponzi scam known as Forsage that operated for more than two years. In addition to a number of promoters, the firm charged the suspected pyramid scheme’s putative creators.
According to the SEC, Forsage’s website went live in January 2020, allowing hundreds of thousands of retail investors to conduct transactions via smart contracts that ran on the Ethereum, Tron, and Binance blockchains. The SEC stated that traders earned compensation by recruiting others into the scheme.
In a typical Ponzi scheme, Forsage allegedly used property from new purchasers to pay prior purchasers, according to the SEC complaint.
Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber section, stated, “Forsage is a fraudulent pyramid scheme that was established on a wide scale and actively advertised to customers.” Fraudsters are unable to dodge federal securities laws by centering their schemes on smart contracts and blockchains.
The four Forsage founders were last known to reside in Russia, the Republic of Georgia, and Indonesia, according to an SEC statement.
The SEC stated that without admitting or rejecting the accusations, two of the defendants agreed to settle the costs and one consented to pay penalties.
The 11 indicted individuals were unavailable for immediate comment.