Eleven people were charged with creating and promoting a cryptocurrency-based pyramid scheme that authorities said drew more than $300 million from retail investors worldwide.
The U.S. Securities and Exchange Commission said in an Aug. 1 statement that it charged the four founders of Forsage and three U.S.-based people whom the founders employed to promote the pyramid scheme on its website and social media.
Also named in the complaint, filed in U.S. District Court for the Northern District of Illinois, were several members of the Crypto Crusaders, which the agency called "the largest promotional group for the scheme."
The four founders, according to the SEC's complaint, are Vladimir Okhotnikov, last thought to be residing in Tbilisi, Republic of Georgia; Jane Doe a/k/a Lola Ferrari, Bali, Indonesia; and Mikhail Sergeev and Sergey Maslakov, Russia.
Forsage.io, the SEC alleged, was a website through which millions of retail investors could enter transactions via smart contracts that operated on the ethereum, tron and Binance blockchains.
"However, Forsage allegedly has operated as a pyramid scheme for more than two years, in which investors earned profits by recruiting others into the scheme," the SEC alleged. "Forsage also allegedly used assets from new investors to pay earlier investors in a typical Ponzi structure."
Cease-and-desist actions were filed against Forsage for operating as a fraud, in September 2020 by the Securities and Exchange Commission of the Philippines and in March 2021 by the Montana Commissioner of Securities and Insurance, the SEC said.
Nonetheless, "the defendants allegedly continued to promote the scheme while denying the claims in several YouTube videos and by other means," the agency said.
The 11 defendants were charged with violating the registration and antifraud provisions of the federal securities laws. The SEC’s complaint is seeking an injunction against them and demands that they give up profits from the scheme and pay civil penalties.
The Forsage site was still active as of Aug. 1.
