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SEC: Forsage Founders Ran a $300M Ponzi Scheme

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Pavan A Follow

INDIA

Aug, 04 2022

Aug, 04 2022

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US SEC charges eleven individuals with conducting a Ponzi scheme and cryptocurrency pyramid scheme targeting retail investors worldwide. 


Millions of investors worldwide were scammed out of more than $300 million by Forsage, a crypto Ponzi scheme that claims to be a decentralized smart contract platform. The scheme was promoted by three U.S.-based promoters as well as four founding members, Vladimir Okhotnikov, Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov. 


According to the SEC complaint, Forsage was structured as a Ponzi scheme, which spanned multiple countries, including Russia and the U.S., in which investors were rewarded for recruiting new investors. 


The SEC stated in its court document: “Forsage platform did not sell or purport to sell any actual, consumable product to bona fide retail customers during the relevant time period and had no apparent source of revenue other than funds received from investors. The primary way for investors to make money from Forsage was to recruit others into the scheme.” 


Forsage investors created crypto wallets and then bought "slots," enabling them to earn money off of other Forsage members called "downlines," according to the regulator. The 11 defendants have all been charged with violating Section 5 A & C and Section 17(a) (1 &3) of the US Securities Act. Under Section 10B-C of the US Exchange Act, they have also been charged with fraud. 


In September 2020, The SEC of the Philippines and the Montana Commissioner of Securities and Insurance issued cease-and-desist orders against it, but it continued to operate.


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Pavan A

CBW - External Analyst

INDIA

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