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U.S. SEC takes down $300 million crypto pyramid scheme

Kitco News

(Kitco News) The U.S. Securities and Exchange Commission (SEC) charged 11 individuals for creating and promoting a crypto pyramid and Ponzi scheme that raised more than $300 million from investors worldwide.

The individuals charged were the four founders from Russia, the Republic of Georgia, and Indonesia, three U.S.-based promoters, and several other members of the promotional group Crypto Crusaders that operated in the U.S., the SEC said in a statement.

The crypto scheme launched in January 2020 under the name Forsage. It was a website that "allowed millions of retail investors to enter into transactions via smart contracts that operated on the Ethereum, Tron, and Binance blockchains," the SEC said.

Forsage allegedly operated as a pyramid scheme for more than two years. Existing investors could earn profits by recruiting more people into the plot. "Forsage allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure," the SEC said.

Two defendants agreed to settle the charges without admitting or denying the allegations. And one of them agreed to pay all the penalties, according to the SEC said.

"Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors," said Carolyn Welshhans, Acting Chief of the SEC's Crypto Assets and Cyber Unit. "Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains."

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