On Monday, the Securities and Exchange Commission (SEC) filed charges against 11 people for reportedly defrauding investors of more than $300 million through a Ponzi and crypto pyramid scheme.
Authorities claim that the plan began early in January 2020. Millions of retail investors in the US and other countries, they claim, were defrauded by the creators of the website Forsage.io.
According to officials, investors engaged in transactions through smart contracts that ran on the Ethereum, Tron, and Binance blockchains.
The statement comes as cryptocurrency has grown in popularity among regular investors, raising the risk of scams. For instance, the CEO of Mining Capital Coin was accused of participating in a $62 million worldwide investment fraud conspiracy by the U.S. Department of Justice in May.
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According to a statement made in a news release by Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber Unit, “Forsage is a fraudulent pyramid scheme established on a vast scale and aggressively pushed to investors.” “Fraudsters cannot get around federal securities rules by concentrating their schemes on blockchains and smart contracts.”
The Eastern Division of the Northern District of Illinois is where the SEC’s complaint was lodged. In accordance with the complaint, the four Forsage founders who were among those accused last lived in Indonesia, the Republic of Georgia, and Russia.
Three United States promoters who, according to the complaint, were hired by the founders to promote Forsage on platforms operated by the company, such as its official YouTube channel, were also charged by the Securities and Exchange Commission.
The largest Forsage promotional organization in the United States, according to regulators, was led by several individuals who the Securities and Exchange Commission also accused of participating in the unregistered offer and sale of Forsage securities and promoting the scheme while operating out of at least five different states.
Contact information for representatives of people accused of the charges was provided by the Securities and Exchange Commission, however, they either declined to comment or did not promptly respond to emails seeking comment.
According to the Securities and Exchange Commission, two of the defendants with U.S. citizenship agreed to settle the accusations without admitting or disputing the charges.
Both defendants consented to receive a lifelong injunction against breaking the accused rules again. While one has agreed to pay disgorgement and civil penalties, the other will be obliged to fulfill this obligation if the court so orders.