On August 1, 2022, the Securities and Exchange Commission charged 11 people for founding and promoting an illegal Ponzi and crypto pyramid scheme. Allegedly, the scheme has raised over $300 million from investors all across the globe.
Named Forsage, the scheme was based on a decentralized smart contract that enabled retail investors to conduct transactions on various blockchains including Binance, Ethereum, and Tron. The scheme was like the usual pyramid schemes where the investors were told that they could make huge profits by recruiting others into the scheme.
According to the SEC, the founders of Forsage were using the funds of new investors to pay off the older ones. The founders aggressively promoted the scheme on several new investments through various online promotion methods, but they never sold any “genuine and consumable product.”
The scheme has been in existence since 2020 and the financial watchdog has received several complaints against it. SEC filed an official complaint against Forsage in January 2020 itself and the individuals are being charged now.
The 11 people mentioned in SEC’s official complaint included the four founders of Forsage, namely: Vladimir Okhotnikov, Mikhail Sergeev, Jane Doe a.k.a. Lola Ferrari and Sergey Maslakov. The remaining individuals include Ronald R. Deering, Mark F. Hamlin, Cheri Beth Bowen, Samuel D. Ellis, Sarah L. Theissen, Carlos L. Martinez, and Alisha R. Shepperd.
While the founders are being charged for founding and promoting a fraudulent scheme the remaining individuals are facing charges for violating the anti-fraud provisions and registration rules of the Federal Securities law.