The U.S. Securities and Exchange Commission (SEC) has revealed a global cryptocurrency scheme that defrauded retail investors of $300 million. 11 people have reportedly been arrested for scamming investors as part of a cryptocurrency pyramid and Ponzi scheme through the development and marketing of the “Forsage” website, according to SEC investigators.
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How it targeted Binance, Ethereum, and Tron blockchains
According to the Forsage website, a “smart contract crypto profits program” is available, via which investors can profit by enlisting others in the plan. Additionally, it developed the “first-ever fully decentralized matrix marketing that works exclusively on the blockchain and is developed on Ethereum and Tron smart contracts.”
The fraudulent organization invited investors to transact using smart contracts running on the Ethereum, Tron, and Binance blockchains while operating in at least five U.S. states. According to the SEC’s findings, Forsage reportedly used the money from new investors to reward previous investors in a traditional Ponzi scheme.
2020: Forsage Fraudulent scheme revealed
In its complaint, the SEC stated that
“despite cease-and-desist actions against Forsage for operating as a fraud in September 2020 by the Securities and Exchange Commission of the Philippines and in March 2021 by the Montana Commissioner of Securities and Insurance, the defendants allegedly continued to promote the scheme while denying the claims in several YouTube videos and by other means.”
The SEC is requesting a preliminary injunction, forfeitures, and punitive damages. Four of the Forsage founders who currently reside in Russia, the Republic of Georgia, and Indonesia are among those accused of the fraud. Furthermore, three promoters with American bases are also on the list of 11. Fraudsters “cannot avoid the federal securities law by focusing their plan on smart contracts and blockchains,” claims Carolyn Welshanns, interim director of the SEC’s crypto assets and cyber branch.