SEC charges 11 people in $300M crypto pyramid scheme
Those charged included the founders of the scheme named Forsage
Check out what's clicking on FoxBusiness.com.
The Securities and Exchange Commission said on Monday it charged 11 people for their roles in creating and promoting a fraudulent crypto pyramid and Ponzi scheme that raised over $300 million from retail investors worldwide, including in the United States.
Those charged included the four founders of the scheme named Forsage. They were last known to be living in Russia, the Republic of Georgia, and Indonesia, the SEC said in a statement.
CRYPTO CEO PLEADS GUILTY IN $21 MILLION FRAUD SCHEME, USED INVESTORS' FUNDS FOR HAWAII CONDO BILLS
People exit the headquarters of the U.S. Securities and Exchange Commission (SEC) in Washington, D.C., May 12, 2021. (Reuters/Andrew Kelly/File Photo / Reuters)
The charged individuals could not immediately be reached for comment.
CRYPTO IS CREATING THE ECONOMY OF THE FUTURE: MIAMI MAYOR
According to the SEC's complaint, the scheme's website was launched in January 2020 and allowed millions of retail investors to enter into transactions via smart contracts. It allegedly operated as a pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme, the SEC said.
A representation of cryptocurrencies in this illustration taken, Jan. 24, 2022. (Reuters/Dado Ruvic/Illustration / Reuters)
Forsage also allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure, the SEC complaint added.
CRYPTO QUEEN OF CONGRESS SAYS SHE HAS ‘CONFIDENCE’ IN CRYPTOCURRENCY
"Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors," said Carolyn Welshhans, acting chief of the SEC's Crypto Assets and Cyber unit. "Fraudsters cannot circumvent the federal securities laws by focusing their schemes on smart contracts and blockchains."
The seal of the U.S. Securities and Exchange Commission hangs on the wall at SEC headquarters (Reuters/Jonathan Ernst / Reuters Photos)
Without admitting or denying the allegations, two of the defendants agreed to settle the charges and one of them agreed to pay penalties, the SEC said.