LONDON (Bywire News) - The US securities and exchange commission (SEC) has charged 11 individuals for their involvement in an alleged crypto pyramid and Ponzi scheme that raised over $300 million USD from a range of worldwide investors.
A civil complaint was filed on Monday against the blockchain networking platform called Forsage, which had claimed to be a decentralised smart contract platform allowing investors to enter transactions through those smart contracts on Ethereum, Tron & BSC chains.
The SEC claims that Forsage had operated like a standard pyramid scheme for over two years as investors earned profits by bringing others into the project.
In its formal complaint, the SEC also added that the company was a “textbook pyramid and Ponzi scheme” that didn’t sell “any actual, consumable product” and that “the primary way for investors to make money from Forsage was to recruit others into the scheme.”
Carolyn Welshhans, the acting chief of the SEC’s Crypto Assets and Cyber Unit, said: “As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors.” She went on to add that “fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains.”
The SEC expressed concern that those charged included the company’s four founders whose locations are currently unknown but were known to be living last in Russia, The Republic of Georgia and Indonesia.
A large group including several members of the “Crypto Crusaders” which is the largest promotional group for the scheme were also charged.
Forsage has received several cease-and-desist orders from regulators across the globe. In September 2020, the SEC of the Philippines ordered Forsage to cease operations. The Montana Commissioner of Securities and Insurance in the US did the same in March 2021
Despite several warnings, the defendants "allegedly continued to promote the scheme while denying the claims in several YouTube videos and by other means."
Samuel D. Ellis, a self-proclaimed “cryptocurrency mindset coach” and Sarah L. Theissen, were among those charged regarding Forsage and agreed to settle the charges subject to court approval.
(Writing by Samba Jallow, editing by Klaudia Fior and Tom Cropper)