US financial regulator the Securities Exchange Commission (SEC) has charged 11 individuals involved in the “fraudulent crypto pyramid and Ponzi scheme” Forsage, which raised over US$300mln from retail investors worldwide.
Implicated in the charges are founders Vladimir Okhotnikov, Lola Ferrari (NYSE:RACE), Mikhail Sergeev, and Sergey Maslakov, who were last known to be living in Russia, the Republic of Georgia, and Indonesia.
The SEC alleges that the smart contract-based “networking platform” earned profits by recruiting others into the scheme.
“Forsage also allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure,” the press release stated.
Several members of the US-based “Crypto Crusaders” promotional team have also been implicated, making this a potential test case for determining how influencers are charged in cryptocurrency fraud cases.
"As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors," said Carolyn Welshhans of the SEC’s Crypto Assets and Cyber Unit.
Forsage: A brief history
Forsage was launched in January 2020 as a smart contract-based “networking platform” providing “limitless possibilities of the new economic financial system”.
A spokesperson on Forsage’s Telegram channel explained the system further: “You need to promote your campaign, join people under you, create a team, and expand your network to generate income and earn profits, as Forsage is a global decentralised matrix system that works on 'referrals property,' a team-building and networking platform.”
Cease-and-desist actions were forwarded against Forsage for operating as a fraud in September 2020 by the Philippines SEC and the Montana Commissioner of Securities and Insurance in March 2021.
Forsage continued to promote the scheme and as of July 2022 had over two million participants, according to self-published data.
A request for comment on the SEC investigation resulted in Proactive being blocked from the Telegram channel.