The U.S. Securities and Exchange Commission (SEC) has charged the founders of a crypto pyramid scheme that allegedly took more than US$300 million from retail investors around the world.
According to the SEC’s complaint, the website Forsage.io — which allowed investors to enter smart contract transactions that operated on the Ethereum, Tron and Binance blockchains — allegedly “operated as a pyramid scheme for more than two years, in which investors 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 SEC said.
The regulator also charged several U.S.-based promoters, including members of the so-called “Crypto Crusaders.”
Two of the U.S. promoters settled the charges without admitting or denying the SEC’s allegations. They agreed to cease and desist from violating U.S. securities laws and to pay unspecified disgorgement and penalties. The settlements are subject to court approval.
The four founders of the scheme — including a “Jane Doe” who also goes by the name “Lola Ferrari” — were last known to be in Russia, Indonesia and the Republic of Georgia, the SEC said.
They, along with various promoters based in the U.S., have all been charged with violating the registration and anti-fraud provisions of federal securities laws. Those allegations have not been proven.
The SEC is seeking injunctive relief, disgorgement and civil penalties from those defendants.
According to the SEC, securities regulators in the Philippines brought a cease-and-desist action against Forsage in September 2020, as did state regulators in Montana in March 2021. Yet, the SEC said “the defendants allegedly continued to promote the scheme while denying the claims in several YouTube videos and by other means.”