Cryptocurrency firm Forsage used technology undreamt of when Charles Ponzi was ripping off investors in the 1920s but regulators say the basic idea was the same: A scam in which investors promised big returns were paid off with money from later investors. The Securities and Exchange Commission has charged 11 people in connection with the scheme, which the regulator says raised more than $300 million from investors in the US and elsewhere, CBS reports. The SEC says Forsage was a pyramid scheme as well as a Ponzi scheme, with investors making profits by recruiting others. Investors were promised a "powerful long-term source of passive income."
When it was launched in early 2020, Forsage claimed to be a decentralized smart contract platform operating on the Ethereum, Tron and Binance blockchains, but regulators say its real function was scamming investors, reports CNBC. "As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors," Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber Unit, said in a statement. "Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains."
The SEC says it charged Forsage's four founders—Vladimir Okhotnikov, Jane Doe aka Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov—who are believed to be living in Russia, the Republic of Georgia, and Indonesia. The SEC charged another seven people with violating federal securities laws, including members of the "Crypto Crusaders," a group that promoted the scheme in the US, TechCrunch reports. The regulator says two of the defendants have agreed to settle the charges. (Read more cryptocurrency stories.)