U.S. SEC charges 11 individuals in $300 million crypto pyramid scheme

Forsage’s website allowed millions of retail investors to enter into transactions via smart contracts

The Securities and Exchange Commission said on Monday it charged 11 people for their roles in creating and promoting a fraudulent cryptocurrency pyramid and Ponzi scheme that raised over $300 million from retail investors worldwide, including in the United States.

(Sign up to our Technology newsletter, Today’s Cache, for insights on emerging themes at the intersection of technology, business and policy. Click here to subscribe for free.)

Those charged included the four founders of the scheme named Forsage. They 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.

According to the SEC’s complaint, the scheme’s website was launched in January 2020 and allowed millions of retail investors to enter into transactions via smart contracts. It allegedly operated as a pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme, the SEC said.

Forsage also allegedly 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.”