US SEC charges 11 in $300m crypto pyramid scheme

Founders behind fraud last lived in Russia, Georgia and Indonesia

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The US Securities and Exchange Commission (SEC) said on Monday it had charged 11 people for their roles in creating and promoting a fraudulent crypto pyramid and Ponzi scheme that raised more than $300 million from retail investors worldwide, including in the US.

Those charged include the four founders of the scheme called Forsage who were last known to be living in Russia, the Republic of Georgia and Indonesia, the SEC said in a statement.

The charged individuals could not immediately be reached for comment.

The SEC complaint states that the scheme's website, launched in January 2020, allowed millions of retail investors to enter into transactions via smart contracts.

The site allegedly allowed investors to earn profits by recruiting others, operating as a pyramid scheme for more than two years, the SEC said.

Forsage also reportedly used assets from new investors to pay earlier investors in a typical Ponzi structure, the SEC complaint added.

“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.”

Without admitting or denying the allegations, two of the accused agreed to settle the charges and one of them agreed to pay penalties, the SEC said.

Updated: August 01, 2022, 5:16 PM
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